On Tuesday, risk sentiment remained stable as companies continued to report earnings that surpassed expectations. Johnson & Johnson, Bank of America, Goldman Sachs Group, and Lockheed Martin all exceeded their quarterly earnings projections.
The U.S. Treasury market experienced turbulence due to an unexpected surge in September retail sales, which exceeded economists’ forecasts with a 0.7% month-on-month increase. This raised concerns among investors about the Federal Reserve potentially maintaining higher interest rates for a longer period. As a result, the yield on a 2-year Treasury note reached its highest level in over 17 years, surpassing 5.20%.
Richmond Fed President Thomas Barkin made dovish remarks, stating that the current policy stance is already restrictive and that the recent inflation report is just one of several positive reports.
NVIDIA Corp. faced significant selling pressure as its stock declined by over 3% following the U.S. government’s decision to tighten restrictions on chip exports to China. However, this downturn was limited to the semiconductor industry and did not affect other sectors.
In Tuesday’s trading, the S&P 500 outperformed both the Dow Jones Industrial Average and the Nasdaq 100 with a 0.2% increase. Small caps showed significant outperformance, with the Russell 2000 index rising by 1.6%.
The major US equity ETFs had mixed performance, with the SPDR S&P 500 ETF Trust and the Invesco S&P 500 Equal Weight ETF both displaying gains, while the SPDR Dow Jones Industrial Average ETF and the Invesco QQQ Trust experienced slight fluctuations.
Among the S&P 500’s sector ETFs, the Materials Select Sector SPDR Fund was the top performer with a 0.9% increase, while the Real Estate Select Sector SPDR Fund underperformed with a 0.3% decline.
Stocks in focus included Dollar Tree Inc., which rose by 4.4% after an upgrade from Goldman Sachs, and Viasat, Inc., which climbed over 5.5% following an upgrade from JPMorgan. However, Lucid Group Inc. fell by over 5% after reporting lower-than-expected vehicle deliveries. V.F. Corporation rose by 14% after it was revealed that activist investor Engaged Capital had taken a substantial stake in the apparel brand owner.
After-hours earnings releases included JB Hunt Transportation Services, Inc. and United Airlines Holdings, Inc.
In terms of commodities, crude oil fell by 0.6%, with WTI-grade crude trading at $85 per barrel. Treasury yields saw significant increases, with the 10-year yield rising by 10 basis points to 4.82% and the two-year yield increasing by 12 basis points to 5.21%. The dollar remained steady, while European equity indices closed sideways. Gold edged up by 0.3% to $1,930 per ounce, while silver rose by 1.2% to $22.86. Bitcoin experienced a slight decline of 0.29% to $28,434.