Stocks rallied on Tuesday, with the Nasdaq breaking a three-day slump and gaining 1.26%, while the S&P 500 also saw an increase of 0.39%. However, the Dow Jones Industrial Average fell 0.76%, benefiting from sector rotation that led to the Dow and Nasdaq moving in opposite directions on eight out of the last ten days, a phenomenon not seen since 1995. The tech sector drove yesterday’s gains, with Nvidia’s 6.8% jump leading the way after a previous 9% drop. Carnival also saw gains, with shares rising nearly 9% on better than expected earnings.
Earnings reports also contributed to market movements, with FedEx seeing a 15% surge in after-hours trading after beating earnings and revenue expectations as part of a $4 billion cost-cutting effort. General Mills, however, saw shares drop over 4% in premarket following a mixed earnings report and lower-than-expected forward guidance attributed to inflationary pressures. Micron is set to report earnings after the close, with expectations high due to the company’s 65% increase in shares so far this year. Nike will report after the close the following day, with shares struggling and down around 13% for the year.
The Japanese Yen hit its lowest level since 1986, prompting officials to warn of possible intervention. Volkswagen announced plans to invest up to $5 billion in electric vehicle maker Rivian, causing shares to rise nearly 40% in premarket trading. Microsoft is facing charges of antitrust violations by the European Union related to its Office 365 offering, including bundling Teams, following similar charges against Apple for breaching the bloc’s Digital Markets Act.
Looking ahead, the focus will be on whether the market can maintain momentum following recent gains, particularly in tech stocks. The VIX remains below its historical average, indicating little concern in the overall market. Bond yields have been rallying, with the 10-year note closing below 4.24% on Tuesday, down from 4.74% in April. Economic data releases, including Personal Consumption Expenditures (PCE) on Friday, will be closely watched. Investors are advised to stick with their long-term objectives and investment plans.
