Longer-dated Treasury yields fell on Tuesday as oil prices dropped to a one-week low and traders continued to weigh the implications of Treasury Secretary Scott Bessent’s decision to expand Treasury buybacks.
On Monday, Bessent had warned countries to cut their financial ties with Iran or face secondary sanctions as part of what had been billed as “economic D-Day.” However, oil prices fell to a one-week low on Tuesday as traders viewed economic pressure as less of a risk to oil supplies than a military escalation.
“There’s a lot of push and pull – in the bond market, geopolitics, oil,” said Joe Quinlan, head of market strategy for Merrill and Bank of America Private Bank. “But we’re pretty constructive on the outlook (for the) next 12, 18 months on the US economy; therefore, we are constructive on the markets as well.”
Nvidia’s results will be the next test for the earnings-driven rally. Any signs of slowing growth could reignite concerns about stretched valuations and how long the AI boom can sustain them.
“This is the classic problem of being the epicentre of the buildout – when you are the trade, execution stops being a catalyst and becomes a prerequisite,” said Mark Malek, chief investment officer at Siebert Financial.
Markets have grown wary of cyclical spending and the methods hyperscalers are using to fund their AI buildouts.
The Dow Jones Industrial Average rose 160 points, or 0.3 percent, to 53,577, the S&P 500 gained 24 points, or 0.3 percent, to 7,677 and the Nasdaq Composite gained 171 points, or 0.7 percent, to 26,151.
Most megacaps closed higher. Nvidia rose 2.2 percent and Meta climbed almost 2 percent . Chipmaker Micron gained 2.5 percent, while the broader chips index ended 1.4 percent higher after a 2.7 percent fall on Monday.
Advanced Micro Devices rose 4.9 percent after Raymond James upgraded the stock. Shares of biotechnology firm Moderna surged 14 percent after Barclays hiked its target price. The target price increase on Monday came days after Moderna and Merck reported late-stage trial results for their jointly developed skin cancer vaccine.
Dick’s Sporting Goods plunged 30.7 percent after the retailer cut its annual forecasts. Sportswear company Nike dipped. Target shares fell 3.8 percent after the retailer apologised for and pulled a Halloween costume criticised for evoking blackface, renewing concerns about brand missteps just as its financial turnaround effort had begun to gain traction. (Reuters)
