U.S. stocks mostly higher after rise in Treasury yields stalls

U.S. stocks were slightly higher Tuesday for a second day as Treasury yields slipped from near 16-year highs.

What’s happening

  • The Dow Jones Industrial Average
    was up 8 points, or less than 0.1%, at 34,471.

  • The S&P 500
    rose 10 points, or 0.2%, to 4,410.

  • The Nasdaq Composite
    added 56 points, or 0.4%, to trade at 13,554.

On Monday, the S&P 500 and Nasdaq Composite ended higher, snapping four-day losing streaks, while the Dow booked a modest loss of 36.97 points, or 0.1%, after falling 252 points at its session low.

What’s driving markets

A pause in the rise of bond yields was helping underpin sentiment in stocks helped by a rise in technology stocks ahead of Nvidia’s
earnings report due on Wednesday with the chipmaker seen as a bellwether on the AI software boom. 

The S&P 500 index is down 3.7% over the past month after benchmark Treasury yields rose to their highest in nearly 16 years — a rise sparked in part by concerns about booming supply of debt to refill the government’s coffers after the raising of the debt ceiling by Congress earlier this year and on stronger-than-expected economic data of late.

But with 10-year Treasury yields
steady — for now — stocks were pushing to the upside.

“[T]he market mood got significantly better yesterday,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “Tech stocks fueled the rally in the U.S., as Nvidia jumped 8.5%…before the release of its Q2 results [Wednesday].”

But Ozkardeskaya warned: “Nvidia had better meet its $11bn sales forecast for last quarter, otherwise, there is a chance that we will see a sizable downside correction.”

Traders also have one eye on a likely catalyst later in the week when Federal Reserve Chair Jerome Powell is expected to give a speech at the Jackson Hole symposium.

Powell’s words will “likely to be the next acid test for markets, with particular scrutiny likely to land on any outlook comments. The battle against inflation, as evidenced by the recent consumer prices index, is not yet over, with the level still above the Fed’s 2% target,” said Richard Hunter, head of markets at Interactive investor.

U.S. economic updates set for release on Tuesday include July existing home sales and the Richmond Fed’s manufacturing index for August, both due at 10 a.m. Eastern.

Companies in focus

  • Dick’s Sporting Goods Inc.’s
    stock tumbled 24%, after the retailer’s second-quarter profit missed consensus by a wide margin, while sales also fell short.

  • Macy’s Inc. 
    shares fell 5.2% after the department store retailer reported a loss in the latest quarter while posting a decline in sales. The company logged a fiscal second-quarter net loss of $22 million, or 8 cents a share, whereas it posted net income of $275 million, or 99 cents a share, in the year-prior period.

  • Lowe’s Cos. Inc.
    rose 3.9% after the home improvement supplies firm posted a 1.6% decline in comparable sales for the fiscal second quarter compared with the 2.6% drop that analysts were expecting. Net earnings at Lowe’s were $2.7 billion, or $4.56 a share, compared with $3 billion, or $4.67 a share, in the year-prior quarter.

  • Activision Blizzard
    shares rose 0.9% after Microsoft reached a deal with Ubisoft Entertainment to license the cloud streaming rights to Activision games, in an attempt to secure approval from the U.K. competition regulator. Microsoft stock
    rose 0.6%.

  • Zoom Video
    fell 4% after the videoconferencing giant on Monday reported a big jump in earnings and strong full-year guidance.

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