Traders monitor slight gains in Dow and S&P 500, eye Fed's next moves as tech stocks show volatility
The Dow Jones Industrial Average and the S&P 500 experienced slight gains on Tuesday, as traders awaited further indications from the Federal Reserve on when it might begin to reduce interest rates, according to CNBC.
The Dow advanced by 31.99 points, an increase of 0.08 percent, closing at 38,884.26. This marked the fifth consecutive day of gains for the blue-chip index, its longest streak since December. Meanwhile, the S&P 500 rose by 0.13 percent, finishing the trading day at 5,187.70.
However, the Nasdaq Composite saw a modest decline of 0.1 percent, ending at 16,332.56.
Yields on the 10-year Treasury note fell by approximately 3 basis points, landing at 4.45 percent. The stock market's overall gains were tempered by a 9.5 percent drop in Disney shares after the company reported a revenue shortfall, although it surpassed quarterly earnings expectations.
Additionally, shares of defense technology firm Palantir plunged 15 percent due to guidance that fell short of expectations.
In other news, Peloton’s stock surged 15.5 percent amid reports from CNBC that private equity firms are considering a buyout of the fitness company.
Wall Street's momentum continues following positive US jobs data and comments from Fed Chair Jerome Powell dismissing the possibility of an immediate interest rate hike.
Quincy Krosby, LPL Financial’s chief global strategist, noted, “This is a market that mimics what the Fed is doing. The market has already digested Powell’s comments.” She emphasized the importance of strong trading volume on days when the market rises as a sign of trader conviction.
Krosby further explained, “It is clear that the yields, and the speed at which the yields climb higher or climb lower, are very important for the market. If the market senses that it’s coming down too quickly, then that feeds into the idea that perhaps the economy is slowing at a faster rate.”
On the international front, Chinese technology stocks faced challenges, with major companies like JD.com and Alibaba experiencing declines of 1.8 percent and nearly 3 percent, respectively.
The KraneShares CSI China Internet ETF also fell by 2.5 percent, reflecting a pullback after notable gains earlier in the year.
Todd Sohn, a Strategas ETF strategist, remarked on the volatility of Chinese stock rallies, suggesting that timing trades in this region can be particularly challenging due to its historically flat long-term returns.
In related developments, Citi US equity strategist Scott Chronert expressed optimism about the earnings growth among major technology companies, which he believes bodes well for the broader market.
He remains confident in achieving Citi’s year-end S&P 500 earnings estimate of $245 per share, despite some sectors showing signs of strain.
