Stocks on Wall Street steadied on Tuesday amid relatively quiet trading after a report showed that inflation in the United States was not as bad as economists had expected last month. This came despite continued rises in oil prices amid fears of possible escalation of tensions between the US and Iran and the return of large-scale military confrontations.

The S&P 500 rose 0.1 percent, recouping some of its 0.8 percent losses from the previous session. The Dow Jones Industrial Average fell about 96 points, or 0.2 percent, as of 9:35 a.m. Eastern time, while the Nasdaq Composite rose 0.4 percent, according to the Associated Press.

Stocks received support from a decline in US Treasury yields after data showed that US consumers paid prices 3.5 percent higher in June compared to a year earlier, for gasoline, food, and a wide range of goods and services.

Although this rate is still higher than the level preferred by most consumers and policymakers, it came in below the inflation rate recorded in May of 4.2 percent, and also below economists' expectations of 3.9 percent for June. The slowdown in inflation could ease pressure on the Federal Reserve, which is considering the path of interest rates in the coming period.

Higher interest rates help curb inflation, but on the other hand they slow economic activity and increase borrowing costs, affecting various asset classes and investments.

After the inflation data was released, traders lowered their expectations for a Fed rate hike at its next meeting later this month to less than 17 percent, compared to about 42 percent the previous day, according to data from the Chicago Mercantile Exchange Group.

The decline in bond yields also boosted homebuilder stocks, as lower yields could help reduce mortgage and other loan costs for households and businesses. Shares of Builder’s FirstSource, a building materials company specializing in countertops and windows, rose 1.9 percent, while Lennar, a homebuilding company, rose 1.5 percent.

A recovery in shares of several major computer chip companies helped support market stability, after experiencing sharp fluctuations in recent weeks due to concerns over high valuations driven by the optimism wave surrounding artificial intelligence.

Micron Technology shares rose 4.4 percent, while Nvidia rose 0.6 percent, after both stocks were among the biggest drags on the S&P 500 in the previous session, falling 4.4 percent and 3.5 percent respectively.

But inflation risks remain, especially with ongoing tensions in the Middle East and the possibility of disruption to navigation through the Strait of Hormuz, the vital sea passage through which oil tankers pass from the Arabian Gulf to global markets.

Brent crude, the global benchmark for oil, rose an additional 3.5 percent to $86.18 per barrel. This followed a nearly 10 percent jump on Monday, bringing the price back to levels seen before the temporary ceasefire agreement between the US and Iran in mid-last month.

Investors are focusing this week on the corporate earnings season, with major financial institutions announcing second-quarter profits, as companies face pressure to deliver strong growth that justifies the large increases in stock prices over the past period.

Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs, and Wells Fargo reported quarterly results on Tuesday that exceeded analysts' expectations, supported by strong trading activity and continued strength in US consumer spending.

Shares of most of these banks rose after the results were announced; Goldman Sachs rose 4.7 percent, while Wells Fargo fell 1.7 percent.

In contrast, IBM shares were among the biggest losers on Wall Street, weighing on the Dow Jones, after falling 24.2 percent following CEO Arvind Krishna's remarks that the performance of the software and infrastructure sectors fell short of expectations in the latest quarter.

Krishna explained that customers in late June redirected their spending toward servers, storage, and memory, anticipating price increases related to growing demand for AI technologies. In a letter to investors, he said current conditions require 'perfect execution,' adding that the company had not moved quickly enough, and that delays in closing several large deals accounted for the bulk of the shortfall in results.

In the bond market, the yield on the 10-year US Treasury note fell to 4.57 percent, from 4.62 percent at the end of Monday's trading, halting its rise from the 3.97 percent level recorded before the outbreak of war with Iran.

On global markets, European stocks were mixed after a strong session in Asia. Japan's Nikkei 225 rose 0.7 percent, supported by a 3.3 percent rise in SoftBank Group shares. SoftBank is a major investor in the AI sector; its chairman Masayoshi Son criticized at an event in Tokyo the idea of a bubble in investments related to developing AI capabilities. Stocks in Shanghai also rose 1.4 percent, after the Chinese government announced that the country's exports rose 27 percent in June compared to last year, supported by strong demand related to AI technologies.