Wall Street's main indexes closed higher on Tuesday, as technology stocks recovered from a selloff ahead of AI heavyweight Nvidia's results, while investors found some relief in drops in oil prices and bond yields.
The gains could ease investor concerns sparked by a recent bond market rout that lifted yields and pressured equities. They could also help set the tone for September, a historically weaker month for stocks.
Longer-dated Treasury yields fell on Tuesday as oil prices dropped to a one-week low and traders continued to weigh the implications of Treasury Secretary Scott Bessent's decision to expand Treasury buybacks. US/
"There's a lot of push and pull — in the bond market, geopolitics, oil," said Joe Quinlan, head of market strategy for Merrill and Bank of America Private Bank.
"But we're pretty constructive on the outlook (for the) next 12, 18 months on the U.S. economy; therefore, we are constructive on the markets as well."
Nvidia's NVDA.O results on Wednesday will be the next test for the earnings-driven rally. Any signs of slowing growth could reignite concerns about stretched valuations and how long the AI boom can sustain them.
"This is the classic problem of being the epicenter of the buildout — when you are the trade, execution stops being a catalyst and becomes a prerequisite," said Mark Malek, chief investment officer at Siebert Financial.
Markets have grown wary of cyclical spending and the methods hyperscalers are using to fund their AI buildouts.
According to preliminary data, the S&P 500 .SPX gained 23.76 points, or 0.31%, to end at 7,676.62 points, while the Nasdaq Composite .IXIC gained 165.28 points, or 0.64%, to 26,145.47. The Dow Jones Industrial Average .DJI rose 155.75 points, or 0.29%, to 53,572.91.
TECH STOCKS RECOVER
Most megacaps closed higher, including Nvidia, Meta META.O and chipmaker Micron MU.O. The broader chips index .SOX recovered after a 2.7% fall on Monday.
Advanced Micro Devices AMD.O rose after Raymond James upgraded the stock.
Shares of biotechnology firm Moderna MRNA.O surged after Barclays hiked its target price.
The target price increase on Monday came days after Moderna and Merck MRK.N reported late-stage trial results for their jointly developed skin cancer vaccine.
Dick's Sporting Goods DKS.N cratered after the retailer cut its annual forecasts. Sportswear company Nike NKE.N dipped.
Target TGT.N shares fell after the retailer apologized for and pulled a Halloween costume criticized for evoking blackface, renewing concerns about brand missteps just as its financial turnaround effort had begun to gain traction.
The Personal Consumption Expenditures report on Wednesday could provide greater clarity on price pressures after an in-line consumer inflation reading this month tempered bets on an imminent interest-rate hike by the U.S. Federal Reserve.
On Tuesday, a survey showed U.S. consumer confidence fell in August to its lowest in seven months.
Still, money market participants are pricing in one 25-basis-point rate increase by the end of the year, according to LSEG data.
Against this backdrop, investors will watch Fed Chair Kevin Warsh's Jackson Hole, Wyoming, speech on Friday for clues on the central bank's approach to monetary policy.
Reuters
