Wall Street Extends Its Winning Streak
On Tuesday the S&P 500 reached a record, notching its fourth consecutive day of gains, helped along by strength in tech shares, softer crude prices and expectations of a solid earnings period. Early in the session the broad index was up 0.6%, its best reading since Aug. 13. The Nasdaq Composite likewise opened 0.7% higher, setting a record for the second time this week, while the Russell 2000, which follows smaller and mid-cap firms, added 0.5% early on.[S1][S5]
Technology names drove most of the advance. Chipmaker Marvell, cybersecurity company Palo Alto Networks and Dell Technologies all contributed. Nvidia, already the world's largest public company, rose again and edged closer to becoming the first business ever to reach $6 trillion in market value. Other trillion-dollar technology stocks, including Microsoft, Amazon, SpaceX, Broadcom and Tesla, also traded higher.[S1][S2][S3][S4][S6]
Earnings Season and the AI Engine
Investors are awaiting the third-quarter earnings season, which starts in earnest next week when the largest U.S. banks report. FactSet senior earnings analyst John Butters said analysts and companies have been more optimistic than usual about third-quarter outlooks. Artificial intelligence stocks are expected to be a major contributor. Goldman Sachs analysts said Friday that AI infrastructure shares should account for more than half of S&P 500 earnings-per-share growth in the quarter, with Nvidia and chipmaker Micron alone likely responsible for a third of the index's earnings growth.[S1]
Oil Slips as Pipeline Fears Ease
Energy was the weakest sector as crude prices fell. Brent futures dropped more than 2% to below $99 per barrel, while U.S. crude lost 1.5% to under $88. The declines followed a Bloomberg News report that Saudi Arabia's main cross-country pipeline was operating normally after multiple attacks took it out of service in early September. Saudi Aramco did not respond to repeated requests for comment from NBC News. The pipeline has served as a workaround for the Strait of Hormuz, where shipping traffic remains a fraction of pre-Iran war levels.[S1]
ING commodities analysts said overnight that the market remains nervous about possible supply disruptions from the region and that this anxiety is likely to last until there are signs of progress in a U.S.-Iran deal. They added that the risk of further escalation remains very real.[S1]
Bonds Stay Elevated but May Be Peaking
Treasury yields pulled back a touch after touching new 24-year peaks on Monday. Early in the session the 10-year stayed above 5.29%, and the 30-year was little changed near 5.66%. Both remain at their loftiest since 2002, though some analysts think they are near a ceiling. Apollo's Torsten Slok wrote Tuesday that a number of factors point to rates cresting within roughly a month, noting that the approaching midterm elections increase the chances of a Middle East agreement that would push oil prices lower.[S1][S7][S8]
President Donald Trump has stated repeatedly over recent days that he thinks a deal with Iran ending the seven-month conflict may come together immediately after the midterm elections. On Sept. 9 he predicted oil prices would plunge right after the vote, a change from earlier remarks over many months that the war would be brief. Slok added that an agreement or government measures that bring oil prices down would relieve upward pressure on interest rates, at a moment when yields are already high across almost the whole global bond market.[S1]
