Stocks rebounded on Tuesday after a losing session on Wall Street, as oil prices eased and investors assessed ongoing tensions in the Middle East.
The S&P 500 rose 0.97 per cent to close at 5,751.13, while the Nasdaq Composite gained 1.45 per cent, finishing at 18,182.92. The Dow Jones Industrial Average added 126.13 points, or 0.3 per cent, ending at 42,080.37.
Technology shares led the gains on Tuesday, with Nvidia and Broadcom rising 4 per cent and 3 per cent, respectively. Meta Platforms, Tesla, and Microsoft each increased by at least 1 per cent, while Palo Alto Networks surged 5 per cent.
The start of the new trading month has brought increased volatility as concerns about an escalating conflict in the Middle East grow. Additionally, rising bond yields have weighed on the market, with the 10-year Treasury rate surpassing 4 per cent.
Last week, the market experienced a slight rally following a strong jobs report, with the Dow reaching a new all-time closing high. However, enthusiasm waned this week as investors speculated that the Federal Reserve may not be as aggressive with future rate cuts given the strength of the labor market.
Short-term economic data has further indicated a resilient economy, heightening fears that the central bank may “drag their feet” on interest rate cuts moving forward, Pavlik added.
In company news, U.S.-listed shares of Chinese companies experienced a decline after Beijing’s economic planning agency failed to announce any significant new stimulus plans. Online video platform Bilibili dropped 13 per cent, while automaker Nio fell by about 8 per cent. E-commerce giants JD.com dropped 11.9 per cent and Alibaba declined 8.8 per cent.
Casino operators Las Vegas Sands and Wynn Resorts, which have connections to China through their Macau resorts, dropped more than 2.7 per cent and 3.3 per cent, respectively, in light of the absence of new stimulus measures.
On the other hand, DocuSign saw an 6.6 per cent increase following the news that it will replace MDU Resources in the S&P MidCap 400 index this Friday.
In commodity news, West Texas Intermediate oil futures fell 4.6 per cent on Tuesday as traders monitored Israel’s anticipated retaliation against Iranian missile attacks and U.S. efforts to prevent a broader regional conflict. This decline pressured energy stocks, with the S&P energy sector dropping 2.6 per cent. Marathon Petroleum and Valero Energy saw losses of 7.7 per cent and 5.3 per cent, respectively.
Iron ore dropped from a five-month high, and base metals declined sharply after a highly anticipated briefing by China’s top economic planner concluded without any new commitments to increase government spending.
Iron ore futures in Singapore fell over 5 per cent after rising nearly that amount in the lead-up to the briefing. Copper also saw a significant decline, reaching its lowest point in two weeks amid a broad sell-off across base metals, with investor disappointment evident throughout wider Chinese markets.
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap, Marketech.
