Mateo Colombo
U.S. stocks closed higher on Tuesday, boosted by falling Treasury yields and new favorable comments from Federal Reserve officials.
Markets added to gains made in the previous session, which saw stocks make a solid turnaround after initially falling on geopolitical issues. concerns after a deadly attack on Israel.
The tech-heavy Nasdaq Composite (IND COMP.) led the three main averages, advancing 0.58% to close at 13,562.84 points. The S&P 500 (SP500) added 0.52% to settle at 4,358.24 points, with the benchmark index posting a three-day winning streak for the first time since late August. The blue-chip Dow (dji) won 0.40% to finish at 33,739.30 points.
All 11 S&P sectors finished in positive territory, except for Energy. Utilities and consumer discretionary gained the most.
After being closed on Monday for Columbus Day, fixed income markets reopened on Tuesday. Treasury yields fell, as traders tried to catch up with global markets by buying bonds.
The 10-year yield (US10Y) fell 13 basis points to 4.65%, while the more rate-sensitive 2-year yield (US2Y) fell 12 basis points to 4.96%.
See how Treasury yields have performed across the curve on the Seeking Alpha bonds page.
A series of Federal Reserve officials grabbed the spotlight Tuesday. Speakers were led off by Atlanta Federal Reserve President Raphael Bostic, who at a forum said the central bank’s policy rate was at a sufficiently restrictive level to reduce inflation to its 2% target.
Next, Federal Reserve Governor Christopher Waller, speaking at a conference at George Mason University, said the Fed would “stay on the job” to achieve its goal of reducing inflation. Then, Minneapolis Federal Reserve President Neel Kashkari, at a town hall meeting at Minot State University, said the economy appeared to be on track for a soft landing, though he noted that rising yields could mean that ” the Federal Reserve has to do less.”
Finally, San Francisco Federal Reserve President Mary Daly will speak later that evening.
Positive talk from the Federal Reserve allowed markets to close higher on Monday, following comments from Dallas Federal Reserve President Lorie Logan, Federal Reserve Vice Chairman of Supervision Michael Barr, and Federal Reserve Vice Chairman Federal Reserve, Philip Jefferson. The comments helped market participants overlook the possible ramifications of the latest fighting between Israel and the Islamist group Hamas.
“The tragic events of the weekend remind us of the fragile geopolitical landscape. Markets will watch to see whether the war against Hamas in Gaza escalates to the West Bank and the northern border with Lebanon,” said Andrew Hecht, head of investment group Hecht Commodity Report. Seeking Alpha.
“Iranian involvement and the deaths of Israeli civilians and innocent foreigners could trigger a generalized war, given the bifurcation of the world’s nuclear powers. Gold and oil prices have recovered after recent declines. Markets reflect the landscapes economic and geopolitical, which remain very volatile,” Hecht added.
Turning to Tuesday’s economic calendar, a New York Federal Reserve survey showed U.S. consumers’ inflation expectations remained mostly stable. Meanwhile, the NFIB Small Business Optimism Index fell to 90.8 in September from 91.3 in August. Finally, August wholesale inventories came in at -0.1% m/m to $900.2 billion versus the consensus figure of -0.1%.
Among active stocks, Truist Financial (TFC) saw the biggest percentage gain in the S&P 500 (SP500) following a report that it had entered talks to sell its insurance brokerage unit.
PepsiCo (PEP) gained after the soft drink and snack giant reported strong organic quarterly sales growth and raised its full-year earnings per share guidance.
