Stock futures were little changed in overnight trading Tuesday after a rally fueled by softer-than-expected inflation data. Futures tied to the Dow Jones Industrial Average were flat. S&P 500 futures and Nasdaq 100 futures also traded near the flatline. Stocks climbed Tuesday after a cooler-than-expected inflation report bolstered hopes that the Federal Reserve may not need to raise interest rates as aggressively this year. The consumer price index fell 0.4% in June from the prior month, bringing the annual inflation rate to 3.5%. Economists surveyed by Dow Jones had expected a 0.2% monthly decline and annual inflation of 3.8%. The report prompted traders to scale back expectations for near-term Fed tightening. The probability of a rate hike at the central bank's July meeting fell to 17% from 42% a day earlier, according to CME's FedWatch Tool . Markets, however, continue to price in an increase later this year, with traders assigning a 63% probability that rates will be a quarter- or half-percentage point higher following the September meeting. "While energy played a big role in the price deceleration, the easing was pretty broad and spread across a bunch of categories, a relief to investors," Adam Crisafulli, founder of Vital Knowledge, said in a note. "However, the Fed and economy aren't in the clear inflation is still elevated on an absolute basis, oil is back on an upswing, and AI is proving to be very inflationary at the moment." Investors will turn their attention to another busy day of earnings on Wednesday, with United Airlines, Morgan Stanley, Johnson & Johnson and BlackRock set to report quarterly results. Earnings season has gotten off to a solid start. JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Goldman Sachs all topped analysts' expectations when they reported results Tuesday. Pentair shares tumbled more than 14% in extended trading after the water-treatment equipment maker issued preliminary second-quarter results that missed Wall Street expectations. The company said it expects adjusted earnings of $1.12 a share, well below the $1.48 analysts were expecting, according to FactSet. Revenue is projected to come in at about $930 million, missing the $1.14 billion consensus estimate. Pentair said results were hurt by an adverse impact from inventory levels in its pool distribution channel, though that was partially offset by recoveries of tariffs previously collected under the International Emergency Economic Powers Act. Here's how the major averages fared on Tuesday: Shares of International Business Machines tumbled 25%, logging their worst day on record, after the company warned second-quarter profits will be lower than expected due to soft demand in its software and infrastructure businesses.
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