Stocks generally rose on Tuesday as a decline in oil prices led to lower bond yields. The Nasdaq 100 outperformed other major benchmarks, driven by a rebound in chipmakers ahead of Nvidia Corp.'s anticipated earnings report. Traders are keen for Nvidia's results to confirm the continued strength of the artificial intelligence outlook, with analysts estimating Nvidia's revenue nearly doubled last quarter to $92 billion.
Oil prices, specifically Brent crude, settled below $90 a barrel, partly due to hopes for revived energy flows through the Strait of Hormuz and discussions between Iran and Oman. Additionally, reports of the US returning diplomats to Middle East embassies eased concerns about an escalation of conflict, further contributing to improved market sentiment. The drop in oil prices also alleviated worries about inflationary pressures, which in turn boosted Treasuries.
Economically, US consumer confidence reached its lowest level since the start of the year, reflecting a deteriorating outlook for business conditions and employment. Despite this, the S&P 500 rose 0.3%, the Nasdaq 100 rose 0.6%, and the Dow Jones Industrial Average rose 0.3%. Bond yields saw declines, with the 10-year Treasuries dropping seven basis points to 4.63%.
Investors are also looking ahead to a speech by Federal Reserve Chair Kevin Warsh, scheduled for Friday. Analysts like Matt Maley at Miller Tabak suggest Warsh is likely to maintain a firm stance on Fed communications. The market is particularly sensitive to these communications, especially after a July press conference led to trading volatility. Kenny Polcari at SlateStone Wealth emphasized that investors are eager to hear reassurances from Nvidia regarding strong AI demand, sustained hyperscaler spending, healthy margins, and guidance that justifies ongoing significant investment.
On the commodity front, West Texas Intermediate crude fell 4.6% to $81.08 a barrel, and spot gold rose 0.3% to $4,666.70 an ounce. The overall market sentiment was cautiously optimistic, with many eyes on Nvidia's performance as a key indicator for the broader tech and AI sectors.
