US stocks moved higher on Tuesday as investors welcomed a rebound in tech and a pullback in surging oil prices, putting the focus back on interest rates and the state of the US economy.
The Nasdaq Composite (^IXIC) rose around 1.2% as tech megacaps recouped some of the previous session’s losses. The benchmark S&P 500 (^GSPC) stepped up around 0.7%, while the Dow Jones Industrial Average (^DJI) edged up roughly 0.2%.
Stocks are set to pick up on the winning trend of recent months as Monday’s headwinds ease, with oil prices retreating as Mideast tensions cool somewhat.
Oil also came under pressure after China failed to roll out another large stimulus package on Tuesday, a surprise to investors hoping to add more fuel to the unprecedented rally. Stocks in Hong Kong (^HSI) slumped over 9%, as a roaring stimulus-fueled rally in Chinese stocks fizzled out.
Some “Magnificent Seven” stocks regained ground lost amid negative headlines, with Amazon (AMZN), Apple (AAPL), and Alphabet (GOOG, GOOGL) all nudging higher. Meanwhile, Nvidia (NVDA) built on a closing gain, rising another 4% on Tuesday, as the chip heavyweight’s partner Hon Hai pointed to “crazy” AI demand.
Investors also turned their attention to Fed policy with markets still grappling with busted hopes for jumbo interest rate cuts.
New York Fed president John Williams told the Financial Times on Tuesday that Federal Reserve policy is “well positioned” to nail a “soft landing” for the economy. Meanwhile, Fed governor Adriana Kugler said data will continue to drive rate decisions.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
Those comments sharpened investors’ focus on the CPI inflation report due Thursday, which will provide further clues on the path forward for interest rates.
In corporates, PepsiCo (PEP) got the ball rolling on earnings season, posting a surprise drop in quarterly revenue and lowering its forecast for 2024 sales growth. Shares of the snack and drinks giant ticked up slightly in afternoon trading.
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Sector check: Tech leads, energy lags
Technology (XLK) and Consumer Discretionary (XLY) led Tuesday’s sector action, up about 1.4% and 0.8%, respectively.
Tech megacaps, led by Nvidia (NVDA), pushed markets higher to recoup some of the previous session’s losses, with the Nasdaq Composite (^IXIC) up more than 1%. Nvidia climbed as much as 4%, its highest intraday move since July, on more positive sentiment surrounding its Blackwell chips.
Energy was the day’s biggest laggard after crude oil (CL=F) dropped roughly 4% to trade just above $74 a barrel. The drop comes after oil’s recent rally, spurred by the ongoing conflict in the Middle East, took a breather while China disappointed on more stimulus measures. Brent (BZ=F), the international benchmark price, also dropped 4% to hover north of $77.50.
(Courtesy: Yahoo Finance) -
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China stock rally loses steam as stimulus hopes fade
The recent surge in Chinese stocks hit the pause button on Tuesday after Beijing failed to roll out another large stimulus package, a surprise to investors hoping to add more fuel to the unprecedented rally.
Hong Kong’s benchmark Hang Seng Index (^HSI), which is loaded with large Chinese stocks, dropped around 9% on Tuesday, its worst day since Oct. 2008, after climbing around 20% over the past month on the heels of China unleashing its most aggressive monetary stimulus since the pandemic.
China’s benchmark CSI 300 (000300.SS) also experienced a volatile day as expectations of a large stimulus announcement fueled an initial 10% rise after markets reopened from the country’s weeklong holiday. The index later gave up those gains, finishing the day up a more modest 6%.
The stimulus, a response by China to course-correct its struggling economy, was first announced on Sept. 24. Since then, a surge of inflows has dramatically boosted Chinese equities, particularly in real estate and consumer staples, as investors bet on Beijing’s comeback.
At a press conference on Tuesday hosted by China’s top economic planner, the National Development and Reform Commission (NDRC), Beijing said it’s committed to enacting further support in order to reach its economic goals, which includes an annual growth target of “around 5%.”
On Tuesday, the Shanghai Composite (000888.SS) still eked out gains of around 5% despite an initial climb of around 10% after markets reopened from the country’s weeklong holiday. The index has rallied by double digits, jumping more than 20% from its September lows. It’s up about 30% over the past month.
Similarly, shares of Chinese e-commerce giants like Alibaba (BABA) and PDD Holdings (PDD) have surged over that same period, up more than 35% and 55%, respectively, despite single-digit losses on Tuesday.
Read more about what this could mean for investors here.
(Courtesy: Yahoo Finance) -
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Read More: Tech, Nvidia lead stocks higher as oil prices retreat, China rally stalls