Global equities, including the S&P 500, Nasdaq 100, and Dow Jones Industrial Average, all saw gains of 0.3% to 0.6% on Tuesday, driven by a decline in oil prices and lower bond yields. The positive sentiment was further bolstered by the anticipation of Nvidia Corp.'s earnings report, which analysts expect to show nearly doubled revenue to $92 billion last quarter, indicating continued strong demand for AI. Analysts like Mark Malek at Siebert Financial and Kenny Polcari at SlateStone Wealth are optimistic, anticipating good news regarding AI demand, hyperscaler spending, and margin performance, all while hoping for strong guidance to justify significant investment.
Oil prices experienced a notable drop, with Brent crude falling 3.6% to $87.27, marking its second consecutive decline after a period of gains. This reduction in oil prices alleviated concerns about inflationary pressures, which in turn led to a decrease in bond yields. The yield on 10-year Treasuries fell seven basis points to 4.63%, while Germany's 10-year yield declined five basis points to 3.20% and Britain's 10-year yield dropped seven basis points to 4.99%. The U.S. Treasury Department's recent move to increase its repurchases of longer-term Treasury notes also contributed to the falling yields.
Traders are closely watching economic data ahead of Wednesday's release of the Federal Reserve's preferred inflation gauge. However, US consumer confidence hit its lowest level since the start of the year due to a deteriorating outlook for business conditions and jobs. Investors are also looking ahead to a speech by Fed Chair Kevin Warsh on Friday, especially after a July press conference that rattled trading. Analysts, such as Matt Maley at Miller Tabak, believe Warsh is likely to maintain his stance, making Nvidia's earnings reaction even more critical for market direction.
