US close: Markets mixed ahead of FOMC and CPI, but Apple surges

US stocks finished in a mixed fashion on Tuesday with the Dow falling but the Nasdaq putting in decent gains, helped by a strong performance from tech heavyweight Apple.

The Dow finished 0.3% lower while the S&P 500 rose just 0.3% with investors scaling back their appetite for risk ahead of the conclusion of the Federal Open Market Committee meeting and crucial consumer price index (CPI) inflation data due out on Wednesday.

However, the Nasdaq jumped 0.9% after a 7% surge in the price of Apple as the market welcomed the company's new AI system, Apple Intelligence.

"So much now hinges on where the CPI comes in," said David Morrison, senior market analyst at Trade Nation. Economists expect headline annual inflation to remain unchanged at 3.4% in May. "If recent history is any guide, then there should be widespread relief even if CPI only matches expectations," Morrison said.

As for the FOMC meeting, with no change in policy expected, all eyes will be on the Fed's Summary of Economic Projections and the so-called 'Dot Plot' graph, which should give some visibility over the interest-rate outlook in the near term.

In economic news on Tuesday, the NFIB Small Business Optimism Index rose to 90.5 last month, up marginally from the 89.7 reading in April and ahead of the 89.8 consensus estimate. While this was the highest reading since December 2023, it was still the 29th straight month below the historical average level of 98, according to the NFIB. Meanwhile, the Uncertainty Index rose nine points to 85, its highest reading since November 2020.

Market movers

Apple's share price surged after the launch of Apple Intelligence, new software that uses OpenAI technology to supercharge Apple devices with generative artificial intelligence. “We think Apple Intelligence is going to be indispensable to the products that already play such an integral role in our lives,” said CEO Tim Cook.

Banks and financial stocks were providing a big drag on the Dow, with American Express, JPMorgan Chase and Goldman Sachs among the worst performers.

Buy-now, pay-later service Affirm Holdings jumped 11% after the company said it would be embedding Apple Pay into its payment options.

General Motors gained despite lowering its forecasts for electric vehicle sales after the carmaker unveiled a $6bn share buyback programme.

Dow Jones - Risers

Apple Inc. (AAPL) $206.96 7.16%
Microsoft Corp. (MSFT) $432.39 1.06%
Home Depot Inc. (HD) $335.95 1.02%
3M Co. (MMM) $101.18 0.51%
Merck & Co. Inc. (MRK) $132.06 0.43%
Unitedhealth Group Inc. (UNH) $496.29 0.26%
McDonald's Corp. (MCD) $254.16 0.14%
Dow Chemical Co. (DOW) $56.12 0.12%
Verizon Communications Inc. (VZ) $40.45 0.10%
Dowdupont Inc. (DWDP) $0.00 0.00%