Stocks generally increased on Tuesday as falling oil prices contributed to lower bond yields. The Nasdaq 100, notably, outperformed other major benchmarks, driven by a rebound in chipmakers, specifically ahead of Nvidia Corp.'s anticipated earnings report. This upward movement in stocks was also supported by easing geopolitical concerns in the Middle East, with hopes for renewed energy flows through the Strait of Hormuz and reports of the US returning diplomats to Middle East embassies.
Oil prices experienced a significant drop, with Brent crude settling below $90 and West Texas Intermediate crude falling 4.6% to $81.08 a barrel. This decline in oil prices helped alleviate worries about inflationary pressures, which in turn boosted Treasuries. The yield on 10-year Treasuries decreased by 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 fell seven basis points to 4.99%. This shift in bond yields was also influenced by the US Treasury Department's decision to increase its repurchases of longer-term Treasury notes.
Investors keenly awaited Nvidia's earnings report, with analysts estimating the company's revenue nearly doubled last quarter from a year earlier to $92 billion. There was strong anticipation for positive results, as analysts like Mark Malek at Siebert Financial noted Nvidia was "operating on all cylinders." However, there was also caution, with Kenny Polcari at SlateStone Wealth stating that investors want reassurance regarding strong AI demand, sustained hyperscaler spending, healthy margins, and guidance that justifies significant ongoing expenditure.
Market participants also parsed economic data, including a report indicating that US consumer confidence hit its lowest level since the beginning of the year due to a deteriorating outlook for business conditions and jobs. Attention was also on an upcoming speech by Fed Chair Kevin Warsh, with analysts like Matt Maley at Miller Tabak suggesting Warsh is likely to "stick to his guns" despite pressure from Wall Street to limit Fed communications. The S&P 500 rose 0.3%, the Nasdaq 100 rose 0.6%, and the Dow Jones Industrial Average rose 0.3%.
