The U.S. stock market experienced a rally on Tuesday as both bond yields and bitcoin showed signs of stabilization. The S&P 500 index rose by 0.4%, recovering from its first loss in six days. The Dow Jones Industrial Average increased by 262 points, or 0.6%, with less than an hour of trading remaining, while the Nasdaq composite climbed 0.8%.
Boeing emerged as a significant contributor to the market’s upward momentum, seeing its stock soar 10% after Chief Financial Officer Jay Malave projected growth for the company in the upcoming year based on cash production metrics. MongoDB also played a crucial role in the recovery, with shares jumping 22.5% following strong quarterly results that exceeded analysts’ expectations. United Natural Foods experienced a 5% increase after reporting better-than-expected profits.
Despite these gains, the market faced challenges. Signet Jewelers saw its stock drop by 5.8% after the company issued a forecast for holiday season revenues that fell short of market expectations, indicating it anticipates “a measured consumer environment.” Concerns about consumer spending were echoed by Andre Schulten, Chief Financial Officer of Procter & Gamble, who described the current landscape as “volatile,” although still within the company’s predictions. Procter & Gamble’s stock declined by 1%.
The overall U.S. economy remains resilient, but underlying disparities are evident. Lower-income households continue to grapple with persistent inflation, while wealthier households benefit from a stock market that is just 1% below its all-time high recorded in late October.
In the bond market, Treasury yields stabilized after previous increases. The yield on the 10-year Treasury note decreased to 4.08%, down from 4.09% on Monday, while the two-year yield eased to 3.51% from 3.54%. Rising yields can negatively impact investment prices, particularly for assets considered overvalued.
Bitcoin, which had fallen below $85,000 on Monday, rebounded to over $91,000, aiding the recovery of several cryptocurrency-related stocks. Strategy shares surged 8.1%, compensating for prior losses, while Coinbase Global and Robinhood Markets gained 3.2% and 3.9%, respectively.
On Monday, the spike in yields was attributed to indications from the Bank of Japan regarding a potential interest rate hike. In the U.S., there is optimism that the Federal Reserve may cut its main interest rate during its upcoming meeting in Washington next week. However, the future path of the Fed’s monetary policy remains uncertain. Earlier this year, the Fed reduced its overnight interest rate twice to support a slowing job market. Yet, these lower rates can exacerbate inflation, which has remained above the Fed’s 2% target.
Compounding these challenges is the recent government shutdown, which delayed essential reports on the job market and other economic indicators. According to investment firm Vanguard, the U.S. labor market remains stable but is softer compared to last year. Adam Schickling, a senior U.S. economist at Vanguard, noted a slowdown in overall hiring numbers on a month-to-month basis, attributing it to reduced job-seeking activity due to lower immigration and an increase in retirements. Consequently, the required hiring strength to maintain a steady unemployment rate is less than in previous years.
Internationally, stock indices showed modest movements across Europe and Asia. Notably, South Korea’s Kospi index surged 1.9%, bolstered by technology stocks, including gains of 2.6% for Samsung Electronics and 3.7% for chip manufacturer SK Hynix.
As the market continues to navigate these complexities, investors are closely monitoring economic indicators and corporate earnings to gauge future trends.
