In a notable reversal, US benchmark equity indexes demonstrated resilience intraday after experiencing significant losses in the preceding two sessions. As of midday Tuesday, the Nasdaq Composite Index climbed 2.2% to reach 16,557.5, while the S&P 500 index increased by 2.1%, settling at 5,295.3. The Dow Jones Industrial Average also saw a rise of 1.6%, standing at 39,307.8.
Encouragingly, all sectors reported gains, with real estate and technology leading the charge. Earlier downturns in the market on Friday and Monday were largely influenced by a disappointing US jobs report for July, which emerged on Friday and heightened recession concerns among investors. However, optimism was rekindled as the market began to absorb the implications of this data.
According to Morgan Stanley's recent analysis, the market has begun to anticipate "aggressive" cuts in interest rates by the Federal Reserve in response to the latest employment figures. The firm maintains a bullish outlook, suggesting that a total of 75 basis points in cuts could occur this year based on the perspective that the economy is not in a downturn.
San Francisco Fed President Mary Daly expressed increased confidence regarding the trajectory of US inflation, indicating on Monday that it is moving closer to the Federal Open Market Committee’s target of 2%. Daly noted, "It's clear inflation is coming down closer to our target," reflecting a positive outlook in light of recent economic developments.
In bond market news, the US 10-year Treasury yield surged by 12.2 basis points to 3.90% intraday on Tuesday, while the two-year rate experienced an even more pronounced jump of 12.3 basis points, reaching 4%. From a corporate perspective, Kenvue Inc. (traded under the symbol $KVUE) saw its shares soar nearly 13%, marking it as the top performer on the S&P 500 after reporting a robust second-quarter earnings performance.
Meanwhile, Uber Technologies Inc. ($UBER) followed closely behind, enjoying an 11% rise after reporting stronger-than-anticipated gains in its second-quarter results amid increasing demand for its ride-hailing services. Caterpillar Inc. ($CAT), a leader in heavy machinery, recorded a 3.9% bump in shares, making it the best performer on the Dow following an unexpected year-over-year rise in its second-quarter earnings, despite a decline in revenue.
The company, however, issued a cautious note by lowering its full-year revenue forecast. Looking ahead, several companies are poised to report their earnings after Tuesday’s market close, including Amgen Inc. ($AMGN), Airbnb Inc. ($ABNB), and Devon Energy Corp. ($DVN). In commodity news, West Texas Intermediate crude oil prices ticked up by 0.8% to $73.52 per barrel during intraday trading.
In the precious metals market, gold prices dipped 0.5% to $2,432.70 per troy ounce, while silver remained relatively stable at $27.21 per ounce..