Stocks close higher for third straight day, Nasdaq gains 2.2% ahead of Big Tech earnings


Stocks closed higher for another session on Tuesday as investors assessed lower yields and fresh data for fresh clues to the health of the U.S. economy.

The Dow Jones Industrial Average closed up 337.12 points, or about 1.1%, to end at 31,836.74. The S&P 500 rose 1.6%, closing at 3,859.11. The Nasdaq Composite jumped 2.2%, landing at 11,199.12.

Tuesday’s moves added to the strong rallies seen in the previous two sessions. On Monday, the Dow Jones and S&P 500 gained more than 1% each, while the Nasdaq advanced 0.9%. On Friday, the Dow jumped more than 700 points.

A decline in yields contributed to the latest gains. The yield on the benchmark 10-year Treasury note last fell about 15 basis points to 4.087%. The 2-year Treasury yield last fell about 3 basis points to 4.473%.

Taken together, the index’s performance and major moves are signs that investors are “doubling down on their expectations of an easier Fed,” said Cliff Hodge, chief investment officer at Cornerstone Wealth.

Hodge said the economic data released on Tuesday is also a hopeful point for investors who want the Federal Reserve to change course on interest rate hikes as the central bank tries to fight inflation.

The S&P CoreLogic Case-Shiller 20-City home price index released on Tuesday showed home prices fell 1.3% in the 20 major cities surveyed month-over-month in August, but that they were still 13.1% higher than a year ago. The consumer confidence index also fell, showing that sentiment on the economy has deteriorated after two months of improving prospects.

“It’s a rainbow after a pretty big storm,” Paul Zemsky, chief investment officer at Multi-Asset Strategies and Solutions, said of Tuesday’s bond moves and inflation data. “We’re seeing enough of a slowdown in the economy that we don’t have to worry about the Fed actually raising rates beyond what’s already set.”

“I think we’re finally getting to where the market has priced in the right amount of Fed tightening,” he added. “Once you do that, the uncertainty in the market decreases and we might see higher prices.”

On top of that, traders pored over a handful of company reports. General Motors and Coca-Cola rose 3.4% and 2.5%, respectively, after reporting higher-than-expected profits. Xerox fell 14.1% after earnings per share were half of what was expected.

So far this season, the companies have proven that they are perhaps doing better than expected. FactSet data shows that, through Tuesday morning, 71% of companies that reported beat analysts’ expectations for earnings per share.

Wall Street has its eye on technology for the rest of the week. Meta Platforms and Microsoft report on Wednesday, followed by Amazon and Apple on Thursday. Given their size and market capitalization, any movement is likely to push the market forward.


Comments are closed.