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 during the past month. This came despite continued high oil prices amid fears of possible escalation of tensions between the United States and Iran, and a return to 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 remains higher than the level preferred by most consumers and policymakers, it came in below the inflation rate recorded in May at 4.2 percent, and was also below economists' expectations of 3.9 percent for June. Slower inflation could ease pressure on the Federal Reserve, which is considering the path of interest rates in the coming period.

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

After the inflation data, traders lowered their expectations of the Federal Reserve raising its key interest rate 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 homebuilding stocks, as lower yields could help reduce mortgage and other loan costs for households and companies. Shares of Builders FirstSource, a building materials supplier like countertops and windows, rose 1.9 percent, while homebuilder Lennar rose 1.5 percent.

A recovery in shares of several major computer chip companies helped stabilize the market, after they experienced sharp fluctuations in recent weeks due to concerns about high valuations driven by the wave of AI-related optimism.

Micron Technology 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 continued tensions in the Middle East and the possibility of disruption to navigation through the Strait of Hormuz, the vital sea lane 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 a 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 the middle of last month.

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

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

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

In contrast, IBM was among the biggest losers on Wall Street, putting pressure on the Dow Jones, after falling 24.2 percent following CEO Arvind Krishna's remarks that performance in software and infrastructure segments fell short of expectations in the last 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 completing several large deals accounted for the bulk of the shortfall.

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

On global markets, European stocks had mixed performance after a strong session in Asia. Japan's Nikkei 225 rose 0.7 percent, supported by a 3.3 percent gain in SoftBank Group. SoftBank is a major investor in AI; its Chairman Masayoshi Son criticized the idea of a bubble in AI-related investments during an event in Tokyo.

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 a year ago, supported by strong demand related to AI technologies.