Stocks Rebound, Tech Rallies As Dip Buyers Return: What's Driving Markets Tuesday?

After two days of decline, stocks rebounded on the back of improved sentiment as buyers emerged on dips. The most recent economic data revealed stronger-than-anticipated orders for manufactured durable goods and much stronger-than-anticipated home sales in May, dispelling earlier fears of a recession.

Positive news about China’s plans to deploy policies to boost domestic demand and open up markets further boosted investor sentiment.

On the monetary policy front, ECB Governor Christine Lagarde and other ECB members see little prospect of a pause in rate hikes in July or September, as inflation remains persistent.

Key Highlights From Tuesday’s Trading:

The S&P 500 jumped 0.8%, the Dow Jones ticked 0.4% higher while the tech-heavy Nasdaq 100 soared 1.3%.

Small caps in the Russell 2000 index outpaced large-cap indexes, gaining 1.6%.

U.S. Indices’ Performance on Monday

Analyst Color:

Thanks to a strong rally off the October lows, the S&P 500 entered a new bull market on June 8 and "this young bull probably needs a breather," said LPL analysts Jeffrey Buchbinder and Adam Turnquist.

"A look at the charts suggests this market may be due for a pause," the analysts said adding that bull markets are not linear.

"However, the impending end of the Federal Reserve (Fed) rate-hiking campaign, and the economy's and corporate America's resilience, help make the bull case that steers LPL Research toward a neutral, rather than negative, equities view from a tactical asset allocation perspective."

Tuesday’s Trading In Major US Equity ETFs

In midday trading on Tuesday, the SPDR S&P 500 ETF Trust SPY was 0.9% higher to $435.20, the SPDR Dow Jones Industrial Average ETF DIA rose 0.5% to $338.80 and the Invesco QQQ Trust QQQ rose 1.4% to $362.64, according to Benzinga Pro data.

The best-performing sectors were the Consumer Discretionary Select Sector SPDR Fund XLY, up 1.7%, the Communication Services Select Sector SPDR Fund XLC, up 1.6%, and the Technology Select Sector SPDR Fund XLK, up 1.5%.

Losses were reported by the the Health Care Select Sector SPDR Fund XLV, down 0.4%, and the Utilities Select Sector SPDR Fund XLU, down 0.1%, while the Energy Select Sector SPDR Fund XLE was flat.

Latest Economic Data:

In May 2023, new orders for manufactured durable goods increased 1.7% month-over-month, following an upwardly revised 1.2% increase in April and easily surpassing market expectations of a 1% decline.

Sales of new single-family homes in the United States increased by 12.2% month-over-month to a seasonally adjusted annualized rate of 763,000 in May, the highest level since February of last year, and surpassed expectations of 675,000.

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Stocks In Focus:

• Carnival Corp. CCL rose 8%, erasing Monday’s losses after receiving several analyst upgrades and price target increases.
• Generac Holdings Inc. GNRC rose 8.8% to an eight-month high with Texas power demand is expected to again rise to record levels.
• American Airlines Group, Inc. AAL, Delta Air Lines, Inc DAL and United Airlines Holdings, Inc. UAL all gained over 5% on an improving profit outlook.
• Walgreens Boots Alliance, Inc. WBA fell 9.5% after reporting weaker-than-expected profits.
• Illumina Inc. ILMN fell 4% after starting workforce reductions as part of a multiyear plan to cut expenses.

Commodities, Bonds, Other Global Equity Markets:

Crude oil fell 2%, with a barrel of WTI-grade crude trading at $68. The United States Oil Fund ETF USO was 1.9% lower to $61.50.  

Treasury yields slightly rose, with the 10-year yield up by 4 basis points to 3.77% and the two-year yield up by 2 basis points to 4.77%. The iShares 20+ Year Treasury Bond ETF TLT was 0.4% lower for the day. 

The dollar fell, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, down 0.2%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.5% higher to 1.0955.

European equity indexes closed in the green. The SPDR DJ Euro STOXX 50 Etf  FEZ rose 1.3%. 

Gold fell 0.4% to $1,914/oz. The SPDR Gold Trust GLD was 0.4% lower to $177. Silver rose 0.5% to $22.8, with the iShares Silver Trust SLV up 0.5% to $21. Bitcoin BTC/USD was 1.3% higher to $30,648.

Staff writer Piero Cingari updated this report midday Tuesday. 

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