US stock indices were mixed soon after Tuesday’s open. Yesterday, all the US majors reversed steep losses from overnight to storm higher and ended in positive territory. The rally was led by tech, with the NASDAQ closing 1.4% higher and the S&P 500 up 0.8%. The Dow and Russell 2000 added 0.5% and 1.1%, respectively.
The rebound came after President Trump assured reporters that the war would soon be over, calming fears over energy shortages even as the Strait of Hormuz remained blocked to shipping. US stock indices gapped lower on Sunday night.
The S&P then fell below 6,600 early in the Asian Pacific session to hit its lowest level since the third week of November last year. This represented a decline of over 2% from Friday’s close, with investors desperate to cover long positions as crude oil surged to four-year highs.
US stock indices were already under pressure last week as investors worried about the costs and return on AI investment, as well as the growing concerns over cracks appearing in private credit. The latter has led to significant drops in the stock prices of major players such as Blue Owl and Blackstone. Insurers are also coming under increasing scrutiny.
Despite all this, and as we’ve seen repeatedly since October 2022, traders took the opportunity to ‘buy the dip’. This pushed all the US majors back into positive territory, while filling the downside gap made over the weekend.
Does this mean that all is fine and dandy? One can’t say for sure. Yesterday’s recovery was impressive, and the S&P 500 is much closer to resistance and all-time highs around 7,000 than it was early on Monday. But the bounce came on an assurance from President Trump that the war is nearly over.
Source: TN Trader
Sure, he could quite easily declare it finished later today. But the world would still be no closer to knowing what the aims were and what the Trump administration had achieved through it. In the meantime, Oracle reports earnings after tonight’s close.
CPI and Core PCE will be released tomorrow and Friday, respectively. These may have lost some of their importance given recent moves in energy prices. But if they show additional signs of inflationary pressures, that could sound the death-knell for rate cut expectations this year.
