Oct 8 (Reuters) – Wall Street benchmarks ended on Tuesday, recovering some of the previous session's losses, as investors returned to technology stocks and investors shifted their focus to upcoming inflation data and the start of the third-quarter earnings season.
All three major indexes suffered sell-offs on Monday, each falling roughly 1%, as they were weighed down by rising Treasury yields, rising Middle East tensions and a reassessment of US rate expectations.
Treasury yields eased slightly on Tuesday, meaning investors gravitated to high-growth stocks that have benefited from lower borrowing costs for their growth, such as technology companies.
Information Technology Index (.SPLRCT)A new tab opens The S&P 500 rose 2.1% among sectors. That was helped by advances of 6.6% and 5.1%, respectively, by Palantir Technologies ( PLTR.NA new tab opens and Palo Alto Networks (PANW.O).A new tab opens.
Heavyweight technology names were also buoyant, helping both the Nasdaq (.IXIC) advanceA new tab opens and the S&P 500 (.SPX).A new tab opens They bounced back above last week's levels – albeit fractionally, in the case of the latter.
Nvidia (NVDA.O)A new tab opens The so-called Magnificent Seven were the pick of tech stocks, climbing 4.1% for their biggest one-day percentage gain in a month. There were also gains for Apple (AAPL.O).A new tab opensTesla (TSLA.O)A new tab opens and Meta Platform (META.O)A new tab opensAll of which rose between 1.4% and 1.8%.
On Tuesday, the S&P 500 (.SPX)A new tab opens The Nasdaq Composite (.IXIC) rose 55.19 points, or 0.97%, to 5,751.13.A new tab opens rose 259.01 points or 1.45% to 18,182.92. Dow Jones Industrial Average (.DJI)A new tab opens rose 126.13 points or 0.30% to 42,080.37.
While rising Treasury yields helped lower technology stocks, it is still interest rate policy that is guiding traders and US equity markets.
Investors have been tight-lipped on the US Federal Reserve all year and scrutinized with each new set of economic data for how it might affect the central bank's thinking on whether it plans to deliver a long-awaited bout of interest rate cuts.
Last week's data release, along with Friday's stronger-than-expected jobs report, prompted investors to trim their rate cut bets slightly, though the Fed was leaning toward a 25 basis-point cut versus 50 bps at the next Fed meeting in November.
A trader works on the trading floor at The New York Stock Exchange (NYSE) after the Federal Reserve rate announcement, in New York City, U.S., September 18, 2024. REUTERS/Andrew Kelly/File Photo Purchase License the rightA new tab opens
Traders have now priced in about an 89% chance of a 25 basis-point interest rate cut in November, according to CME FedWatch.
Markets now await consumer price index data this Thursday for the next signpost on the interest rate path.
“I think (Friday's) labor market report, and the CPI report combined, are the two primary items for the Federal Reserve going into their next meeting,” said Jason Pride, head of investment strategy and research at Glenmede.
He added that if the CPI lands anywhere in the expected ballpark, it would signal a 25 bps cut in November.
Most S&P sectors gained, though two ended in negative territory. One was the materials sector (.SPLRCM).A new tab opensThat fell 0.4% as the metal fell as optimism over China's stimulus measures faded.
Shares of US-listed Chinese companies also fell, tracking losses in domestic stocks. Shares in Alibaba Group, JD.com and PDD Holdings ( PDD.O ).A new tab opens decreased between 5.4% and 7.5%.
Energy (.SPNY)A new tab opens Although it was the heaviest fall, the 2.6% slide was its biggest one-day loss since August 20, as oil prices retreated after Monday's rally.
Third-quarter earnings are also coming into focus, with major banks scheduled to report this Friday. The S&P 500 has an estimated earnings growth rate of 5%, according to LSEG estimates.
PepsiCo (PEP.O)A new tab opens The snack maker gained 1.9% after trimming forecasts for annual sales growth, but reported adjusted earnings per share above estimates.
Volume on US exchanges was 11.57 billion shares, compared to the full-session average of 12.1 billion over the past 20 trading days.
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Reporting by Lisa Mattall and Pranab Kashyap in Bengaluru and David French in New York; Editing by Shinjini Ganguly and Matthew Lewis
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