NEW YORK: Wall Street’s main indexes rose on Tuesday, as investors shifted their attention to the upcoming third-quarter earnings season and inflation data, which could offer some clues on the Federal Reserve’s rate cut trajectory.
The indexes regained some ground after a selloff on Monday, where all three major indexes fell roughly 1%, pressured by surging Treasury yields, escalating Middle East tensions, and a re-evaluation of US rate expectations.
The Dow Jones Industrial Average rose 64.71 points on Tuesday, or 0.16%, to 42,019.35, the S&P 500 gained 45.52 points, or 0.80%, to 5,741.49 and the Nasdaq Composite gained 225.48 points, or 1.26%, to 18,149.38.
Most S&P 500 sectors were up, with the information technology index leading the gains with a 1.8% rise.
An index tracking energy stocks lagged, losing 2.8%, and was on track for its worst day since April 30, as oil prices retreated following Monday’s rally.
The two-year Treasury yield slipped slightly from Monday’s highs, but the yield on the benchmark 10-year note remained above 4%, as strong economic data last week prompted investors to trim their rate cut bets.
Traders have priced in a nearly 89% chance of a 25 basis point interest rate cut from the Fed at its November meeting, according to CME FedWatch, while they had previously seen strong chances of a 50 bps cut.
Markets now await consumer price index data, due this Thursday, for more clues on the path of interest rates.
“The Fed keeps telling you that they’re data dependent - so the end of this week is big to see whether or not inflation is truly tamed,” said Kim Forrest, chief investment officer at Bokeh Capital Partners.
“But the Fed has been signaling where - not necessarily when - rates are going, and they have signaled that they’re going lower.”
Third-quarter earnings are also in focus, with major banks scheduled to report this Friday. The estimated earnings growth rate for the S&P 500 is 5%, according to LSEG estimates.
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