Stocks Rally As Oil Prices Tumble; Tech, Chipmakers Lead As Traders Focus On AI Winners Before Earnings Season: What's Driving Markets Tuesday?

After starting the week with a negative session, U.S. markets rebounded on Tuesday, driven by falling oil prices, which helped alleviate concerns about a potential resurgence in inflation.

Crude oil dropped as much as 5% on the day, weighed down by China’s lack of additional fiscal stimulus and a de-escalation in geopolitical tensions between Israel and Iran.

At the same time, Treasury yields paused their recent climb, offering further relief to investors.

Optimism surrounding the upcoming earnings season also buoyed traders, leading to renewed buying in tech stocks and key AI-linked companies. The S&P 500 gained 0.8%, the Nasdaq 100 rallied 1.3% on the back of semiconductor strength, while the Russell 2000 posted a more modest 0.4% rise.

The Magnificent Seven stocks—Microsoft Corp. MSFT, Apple Inc. AAPL, NVIDIA Corp. NVDA, Alphabet Inc. GOOG GOOGL, Amazon Inc. AMZN, Meta Platforms Inc. META and Tesla, Inc. TSLA—were all in the green, collectively adding around $250 billion in market capitalization and inching closer to a combined market value of $16 trillion.

Meanwhile, the CBOE Volatility Index (VIX), often referred to as Wall Street’s “fear gauge,” fell 6%, reversing a sharp 17% spike from Monday.

Commodity markets weren’t spared from the broader Chinese-led sell-off, with metal prices taking a hit. Gold dropped 1.2%, while silver plunged over 4%, both reacting to China’s underwhelming stimulus news.

In the crypto space, Bitcoin BTC/USD rose 0.5%, trading at $62,479.

Tuesday’s Performance In Major US Indices, ETFs

Major Indices	Price	1-day %chg
Nasdaq 100	20,051.16	1.3%
S&P 500	5,742.69	0.8%
Russell 2000	2,201.50	0.4%
Dow Jones	42,017.06	0.1%

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust SPY edged 0.7% higher to $571.68.
• The SPDR Dow Jones Industrial Average DIA inched 0.1% up to $420.10.
• The tech-heavy Invesco QQQ Trust Series QQQ rose 1.2% to $487.35.
• The iShares Russell 2000 ETF IWM rose 0.3% to $218.07.
• The Technology Select Sector SPDR Fund XLK outperformed, up 1.6%. The Energy Select Sector SPDR Fund XLU lagged, down 2.9%.

Tuesday’s Stock Movers

• Palo Alto Networks Inc. PANW rallied 5% after Goldman Sachs raised its price target from $376 to $425.
• Lower oil prices triggered rallies in cruise lines and airlines. Carnival Corp. CCL rose 4.5%, Norwegian Cruise Line Holdings Ltd. NCLH gained 3.8%, American Airlines Group Inc. AAL climbed 3.7%, and Delta Air Lines Inc. DAL added 2.8%.
• The energy and materials stocks that fell the most on Tuesday included Marathon Petroleum Corp. MPC, down 7.8%, Freeport McMoRan Inc. FCX, down 5.2%, and Valero Energy Corp. VLO, down 4.9%.
• Docusign Inc. DOCU rallied 8.3% after it was announced that it would join the S&P MidCap 400.
• PepsiCo Inc. PEP rose 0.6% in reaction to its quarterly earnings.

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Image created using artificial intelligence via Midjourney.