Stocks Rise On Positive Earnings; Treasury Volatility Returns, Nvidia Stumbles: What's Driving Markets Tuesday?

Risk sentiment held steady on Tuesday as corporations continued to report better-than-expected earnings. Johnson & Johnson JNJ, Bank of America Corp. BAC, Goldman Sachs Group Inc. GS, and Lockheed Martin Corp. LMT all exceeded quarterly earnings expectations.

An unexpected surge in September retail sales, which increased by 0.7% month-on-month, surpassing economists’ forecasts, rekindled turbulence in the U.S. Treasury market. Investors remain concerned that the Federal Reserve may maintain higher interest rates for an extended period. As a result, the yield on a 2-year Treasury note surged past 5.20%, reaching its highest point in over 17 years.

Richmond Fed President Thomas Barkin issued dovish remarks, suggesting that the current policy stance is already restrictive and that the recent inflation report is just one of several positive reports.

NVIDIA Corp. NVDA experienced a significant selloff, with its stock declining by over 3% during the day, following the U.S. government’s decision to tighten restrictions on chip exports to China. This downturn was confined to the semiconductor industry and did not extend to other sectors.

Cues From Tuesday’s Trading:

The S&P 500 saw a 0.2% increase, showing a marginal outperformance compared to both blue-chip stocks, represented by the Dow Jones Industrial Average, which rose by 0.1%, and tech stocks, as indicated by the Nasdaq 100, which experienced a 0.1% decline.

Small caps sharply outperformed, with the Russell 2000 index rising 1.6%.

US Index Performance On Tuesday

Tuesday’s Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was 0.14% higher to $436.65
• The Invesco S&P 500 Equal Weight ETF RSP rose 0.6% to $142.84
• The SPDR Dow Jones Industrial Average ETF DIA edged 0.1% up to $340.26 
• The Invesco QQQ Trust QQQ fell 0.1% to $368.94, according to Benzinga Pro data.

Looking at S&P 500’s sector ETFs:

• The Materials Select Sector SPDR Fund XLBXLE was the outperformer, up 0.9%.
• The Real Estate Select Sector SPDR Fund XLRE underperformed, down 0.3%

See also: Futures Vs. Options

Stocks In Focus:

• Dollar Tree Inc. DTLT rose 4.4% after Goldman Sachs upgraded the stock.
• Viasat, Inc. VSAT climbed over 5.50% in premarket trading after JPMorgan upgraded the stock.
• Lucid Group Inc. LCID fell over 5% after reporting lower-than expected deliveries last quarter (1,457 vehicles vs. the analyst estimate for 2,000 vehicles).
• V.F. Corporation VFC rose 14% after reports confirmed that activist investor Engaged Capital has taken a big stake in the apparel brand owner.
• Companies releasing their earnings after the close include JB Hunt Transportation Services, Inc. and United Airlines Holdings, Inc. UAL

Commodities, Bonds, Other Global Equity Markets:

Crude oil fell 0.6%, with a barrel of WTI-grade crude trading at $85. The United States Oil Fund ETF USO was 0.5% lower to $71.58.  

Treasury yields were sharply higher, with the 10-year yield up by 10 basis points to 4.82% and the two-year yield rose by 12 basis points to 5.21%. The iShares 20+ Year Treasury Bond ETF TLT was 1.2% lower for the day. 

The dollar held steady, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, flat for the day. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was up0.7% lower to 1.0820.

European equity indices had a sideways close. The SPDR DJ Euro STOXX 50 ETF  FEZ was 0.5% higher. 

Gold edged 0.3% up to $1,930/oz, while silver rose 1.2% to $22.86. Bitcoin BTC/USD was 0.29% lower to $28,434.

Staff writer Piero Cingari updated this report midday Tuesday. 

Read Next: Economists See Recession Risk Waning, End Of Fed Rate Hikes: How Could Treasury ETFs React To Yields?

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