Tuesday saw a rebound in major indexes following a sharp decline in the previous session. Large-cap technology stocks surged and oil prices fell.
The Dow Jones Industrial Average gained 0.3 percent, while the S&P 500 and Nasdaq both closed higher by 1% and 1.5 percent, respectively. On Monday, the major indexes, which had been near all-time highs going into the week, lost ground as expectations for significant interest rate cuts diminished following last week’s strong jobs report and oil prices rose amid tensions in the Middle East.
All large-cap tech stocks rose on Tuesday, led by AI investor favorite Nvidia (NVDA), which gained 4.1 percent on continued optimism regarding demand for its next-generation products. Broadcom (AVGO), Alphabet (GOOGL), Meta Platforms (META), Amazon (AMZN), and Apple (AAPL) all gained ground. Yesterday, Nvidia overtook Microsoft as the second-largest company by market capitalization.
Despite the consumer goods company’s disappointing quarterly results, shares of PepsiCo (PEP) increased 1.9%. When a number of large banks are scheduled to release their results later in the week, the earnings reporting season kicks into high gear.
In response to growing concerns that an escalation of the conflict in the Middle East could pose a threat to the supply of oil worldwide, crude oil futures fell by more than 4%, reversing a significant portion of the gains that had been made over the previous week. Marathon Petroleum (MPC), Phillips 66 (PSX), and Valero Energy (VLO), which had surged in line with the recent gains in oil prices, fell sharply, causing the S&P 500 energy sector to fall 2.6%.
After China reopened after a week-long holiday, U.S.-traded shares of Chinese companies also fell after Beijing failed to announce new stimulus measures. On Tuesday, the iShares MSCI China ETF (MCHI), which had gained 38% since the announcement of the first set of measures two weeks earlier, lost 11%.
The calendar of economic data was sparse on Tuesday, but it picks up significantly later in the week with the publication of inflation data that is closely watched and the most recent reading on consumer sentiment. Investors will keep an eye on the numbers to see if they provide additional evidence that the economy is doing well. They will also be looking for clues about how aggressive the Federal Reserve will be when it reduces interest rates. Last month, the Federal Reserve reduced its benchmark fed funds rate for the first time in four years.
According to fed fund futures trading data, market participants now believe it is likely that the Fed will cut the benchmark rate by two quarter percentage points before the end of the year in response to the strong jobs report on Friday. Markets were pricing in the possibility that the Fed would announce a cut of half a point in November and a cut of half a point in December prior to the jobs report.
After rising above 4% on Monday for the first time in two months, the yield on 10-year Treasurys fell slightly to 4.014% as market expectations for significant rate cuts dwindled.
The lowest level in more than two weeks for gold futures was around $2,640 an ounce, while bitcoin was down 1.3% to around $62,500.
Tuesday’s biggest S&P 500 movers
11 hr 49 min ago
Advancers
- Palantir Technologies (PLTR)’s shares rose 6.6% on Tuesday, making it the S&P 500’s strongest daily gain. Ark Invest, a company that manages assets, emphasized software as a sector where AI trends could have a greater impact. Ark Invest Europe’s managing director, Rahul Bhushan, said that Palantir could be on the verge of taking market share from the mega-cap tech companies whose cloud computing platforms have been a big part of the AI boom.
- Shares of Edwards Lifesciences (EW) rose 6.2%. After the Centers for Medicare and Medicaid Services (CMS) stated that it was evaluating the possibility of national Medicare reimbursement for transcatheter repair procedures, the medical device company may see increased momentum for its heart valve repair system.
- Following favorable remarks from a number of investment research firms, Palo Alto Networks (PANW), a provider of cybersecurity services, saw its stock price increase by 5.1%. Goldman Sachs raised Palo Alto’s price target, implying that the company’s plan to move up to more sophisticated serviced offerings could fuel growth. In the meantime, with an “outperform” rating, BNP Paribas began covering the networking technology company’s stock.
Decliners
- In light of reports suggesting that tensions in the Middle East may be decreasing, crude oil futures prices dropped by more than 4%. Oil and gas stocks were put under pressure as prices fell. Shares of Marathon Petroleum (MPC) fell 7.7%, the most of any stock in the S&P 500. The session ended with a 5.3% decline in Valero Energy (VLO), a rival refiner.
- After the company reported encouraging delivery figures for its graphics processing units, shares of Super Micro Computer (SMCI) fell 5.0% on Tuesday, reversing some of the stock’s strong gains from the previous session. The Department of Justice is reportedly looking into Supermicro’s accounting practices, according to reports that surfaced last month.
- KeyBanc analysts lowered their assessment of Celanese (CE) shares from “overweight” to “sector weight,” citing softness in the automotive end market and a cautious outlook for the foreseeable future. On Tuesday, Celanese shares lost 4.6 percent.
Palantir Takes Advantage of Recent AI Demand Optimism
12 hr 25 min ago
After asset management firm Ark Invest highlighted software as an area with more room to benefit from artificial intelligence (AI) trends, shares of data analytics software company Palantir Technologies (PLTR) were the S&P 500’s biggest gainers on Tuesday.
Rahul Bhushan, managing director of Ark Invest Europe, stated in an interview with CNBC that data analytics and software companies such as Palantir could be poised to take market share from mega-capitalization tech companies such as Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL), whose cloud-computing platforms have been a focal point in the emerging AI boom.
Hardware and infrastructure, according to Bhushan, have contributed 80% of the value that investors have invested in AI-related companies’ shares over the past two and a half years. According to Bhushan, Ark Invest is “finding far more asymmetrical opportunities today” in businesses further down the “AI stack,” such as those offering platform-as-a-service and software-as-a-service products.
