WS #12040

The dominant signal in this window is the severe IBM earnings miss, which is causing a sector-wide rout in software and IT services stocks. IBM warned that clients redirected quarterly IT budgets toward AI infrastructure in late June, leaving software deals unclosed. This has triggered a 17-22% premarket drop in IBM and is dragging down other software names like ServiceNow (NOW), Microsoft (MSFT), and Palantir (PLTR). Goldman Sachs explicitly noted this should drive broad-based weakness across the software and services layer. The IBM miss is the most significant company-specific event and is being corroborated by multiple sources (Reuters, SeekingAlpha, social media). Countering this negative software narrative, the June CPI data came in softer than expected (headline 3.5% vs 3.8% expected, core 2.6% vs 2.8%, month-over-month -0.4%), which sent Treasury yields lower and caused market odds for a Fed rate hike on July 29 to plummet to 8%. This is a bullish macro counter-signal that offsets some of the tech weakness. Additionally, the US-Iran/Hormuz tensions continue to escalate, with reports of a third day of US strikes on Iran and Trump proposing a 20% toll on ships transiting the Strait of Hormuz. Oil prices are climbing, and this is being corroborated by multiple geopolitical and energy-focused sources. Bank earnings are also in focus: JPMorgan reported a strong beat (net revenue +28% Y/Y to $57.3B, net income +41% Y/Y), Goldman Sachs posted record stock-trading results, and Bank of America topped Q2 estimates. However, the IBM-driven software selloff is the most immediate market-moving factor for today's trading session.