The Nasdaq rose on Tuesday as investors looked to big tech gains and eyed slippery yields for more clues about the health of the US economy.
The tech index added 2%, while the S&P 500 rose 1.3%. The Dow Jones Industrial Average added 286 points, or 0.9%.
The yield on the benchmark 10-year Treasury note last fell about 15 basis points to 4.085%, based on volatility Seen Monday and last week. The 2-year Treasury yield fell about 7 basis points to 4.424%.
Taken together, the index’s performance and major moves are signs investors are “doubling down on expectations of a looser Federal Reserve,” said Cliff Hodge, chief investment officer at Cornerstone Wealth.
Hodge said Tuesday’s economic data was also a point of hope for investors looking for the Federal Reserve to change course on interest rate hikes as the central bank tries to curb inflation.
The S&P CoreLogic Case-Shiller 20-City House Price Index released on Tuesday showed house prices fell 1.3% in the 20 central cities studied month by month in August, but they were still 13.1% higher than a year ago. The Consumer Confidence Index also fellshowing that the view of the economy has soured after two months of improving prospects.
“The market is starting to get some indications that economic data is likely to slow down,” he said. “The knock-on effects from there maybe give the Fed a little more breathing room.”
Alphabet and Microsoft are among the companies to report earnings after the bell as a week with tech as the centerfold continues. Chipotle Mexican Grill is also on deck.
Those reports will come after some results before the bell.
UPS, 3M and General Motors posted better-than-expected earnings. UPS and GM shares rose in early trading, but 3M fell 1.6%.
Coca-Cola also reported stronger-than-expected earnings, sending shares up 1%.
So far this season, companies have shown that they are doing better than expected. That’s partly due to the fact that analysts’ earnings estimates have been lowered in recent months as companies grappled with currency headwinds and other growth concerns. This could set stocks up for potentially better-than-feared rallies.
“‘Earnings have really come down a little bit,'” said Sam Stovall, chief investment strategist at CFRA. “Maybe investors are happy that it was up 2% and not down 2%, but we’ve also seen downgrades in forecasts for 2023. This bear market probably has to be resolved even if we have a short-term bear market rally.”
Meta Platforms reports on Wednesday, followed by Amazon and Apple on Thursday. Given its large size and market cap, any move is likely to push the market higher.
Tuesday’s moves come after a consecutive rally.
The Dow rose 417.06 points, or 1.3%, on Monday. The Nasdaq Composite finished 0.9% higher and the S&P 500 added about 1.2%, with nine of the 11 sectors finishing higher led by health care.
“The market has become accustomed to real price volatility, almost desensitized to it,” said Jeff O’Connor, head of market structure in the Americas at Liquidnet. “And the wild moves are making trading conditions much more difficult.”
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