NEW YORK (AP) — Stocks are ticking higher Tuesday after a report showed U.S. inflation was not as bad last month as economists expected. That was even though oil prices continue to swing on worries that the United States and Iran may return to all-out war.

The S&P 500 added 0.5% to recover some of its 0.8% loss from the prior day. The Dow Jones Industrial Average was up 14 points, or less than 0.1%, as of 11:30 a.m. Eastern time, and the Nasdaq composite was 1.1% higher.

Stocks got help from easing yields in the bond market, which fell after a report said U.S. consumers had to pay prices for gasoline, food and other costs of living that were 3.5% higher last month than a year earlier.

While that’s more than nearly everyone would like, it wasn’t as bad as May’s 4.2% inflation rate or the 3.9% that economists expected for June. Less bad inflation could take pressure off the Federal Reserve, which is considering raising interest rates.

Higher rates can keep a lid on inflation, but they also slow the economy and hurt prices for all kinds of investments.

Following the inflation report, traders see less than a 13% chance that the Fed will raise its main interest rate at its next meeting later this month. That’s down from the nearly 42% probability they saw the day before, according to data from CME Group.

Rebounds for big, influential tech stocks also helped steady the market. They’ve been swinging sharply in recent weeks on worries that they shot too high in the euphoria around artificial-intelligence technology and that the voracious demand for AI chips and data centers may fade if they don’t produce the promised profits and productivity.

Micron Technology rose 5.1%, and Nvidia added 2.8%. A day before, they were two of the heaviest weights on the S&P 500 after falling 4.4% and 3.5%, respectively.

To be sure, big risks remain for inflation. Fighting in the Middle East is threatening to close or slow traffic in the Strait of Hormuz, the narrow waterway that oil tankers use to exit the Persian Gulf and deliver crude to customers worldwide.

The price for a barrel of Brent crude, the international standard, briefly topped $87 in the morning. Following its leap of nearly 10% on Monday, that brought it back to where it was before the United States and Iran signed their interim deal to halt their fighting in the middle of last month.

Brent’s price later pared its gain and was sitting at $84.14, up 1% from the day before. President Donald Trump backed away from his threat made a day before to charge 20% on all cargo going through the strait to reimburse the U.S. military for its protection.

Wall Street’s other big focus this week is the start of earnings reporting season, as companies tell investors how much profit they made from April through June. The pressure is on companies to deliver big growth to justify how high their stock prices have jumped. Indexes are near records despite the recent swings caused by worries about AI stocks.

Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs and Wells Fargo all on Tuesday reported fatter profits for the latest quarter than analysts expected. Their reports showed strength for their trading desks and suggested spending by U.S. consumers remains resilient.

Their stocks mostly rose following the results. Goldman Sachs jumped 7.4%, but Citigroup fell 2%.

IBM was the single heaviest weight on the S&P 500 and the biggest reason the Dow lagged behind other indexes after dropping 25.9%. Its heading toward the worst day in its history, going back to 1972.

CEO Arvind Krishna said performance for IBM’s software and infrastructure businesses fell short of expectations last quarter after customers shifted their spending toward servers, storage and memory to get ahead of expected price increases caused by the AI boom.

“These conditions require our teams to execute perfectly, and this quarter we faltered,” Krishna wrote in a letter to investors. “We did not adapt and move quickly enough, and numerous large deals failed to close on the timelines we expected, driving the majority of our shortfall.”

In the bond market, the yield on the 10-year Treasury dropped to 4.55% from 4.62% late Monday. It’s a notable move, and it halts a run higher from 3.97% before the war with Iran began.

Fed Chair Kevin Warsh testified before lawmakers on Capitol Hill for the first time since taking over leadership of the central bank. He pledged to make high inflation “a thing of the past” but offered no signal about the Fed’s next steps.

In stock markets abroad, indexes edged higher in Europe following a stronger finish in Asia.

Japan’s Nikkei 225 added 0.7% after SoftBank Group Corp. rose 3.3%. It’s a big investor in AI, and Chairman Masayoshi Son gave a speech in Tokyo where he derided the idea that there is a bubble in investments in capacity for AI.

Stocks rose 1.4% in Shanghai after the government reported China’s exports jumped 27% in June from a year earlier as AI drove strong demand for computer chips and other technology.

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AP Business Writer Elaine Kurtenbach contributed to this report.

Stan Choe, The Associated Press