Wall Street experienced a subtle upward trend on Tuesday, driven by investor optimism in anticipation of the Federal Open Market Committee (FOMC) meeting. The FOMC is expected to deliver the first interest rate cut in over four years on Wednesday, sparking a wave of positive sentiment.
Among the standout performers were small-cap stocks, as the Russell 2000 index soared by 1.3%. This surge propelled the index toward its highest close since early August, outperforming its larger-cap counterparts. Sectors like solar, clean energy, and regional banks saw significant gains, as traders pinpointed segments of the market poised to benefit from lower interest rates.
On the macroeconomic front, August retail sales provided a pleasant surprise, reporting a 0.1% month-over-month increase, surpassing the anticipated 0.2% decline. This positive data subtly reduced the likelihood of a more aggressive 50-basis-point rate cut. Market-implied probabilities for such a move, according to the CME FedWatch Tool, slipped from 67% to 63%. The expectation of a substantial rate cut moderated, causing short-dated Treasury yields to rise. The dollar, fueled by these developments, also strengthened, gaining 0.2%.
In the commodities market, gold experienced a slight dip of 0.7% from its record-high close on Monday. Conversely, oil prices surged by 1.3% in response to escalating geopolitical tensions in the Middle East. Reports surfaced of a coordinated attack in Lebanon, targeting thousands of pagers linked to Hezbollah militants, resulting in numerous casualties within the Iran-backed organization. Additionally, Iran’s ambassador to Lebanon reportedly sustained injuries, though the official responsibility for the attack remains unclaimed.
Bitcoin, represented by BTC/USD, jumped over 4%, buoyed by positive inflows from exchange-traded funds (ETFs). This surge signals renewed investor interest in the digital asset space as interest rates shift.
Here’s a snapshot of major indices’ performance:
*
Russell 2000
: 2,220.44 (1.3% up)*
S&P 500
: 5,642.79 (0.2% up)*
Nasdaq 100
: 19,441.83 (0.1% up)*
Dow Jones
: 41,636.05 (0.0% change)Key ETFs also saw movement:
*
SPDR S&P 500 ETF Trust (SPY)
: $563.44 (0.1% up)*
SPDR Dow Jones Industrial Average (DIA)
: $417.61 (0.1% up)*
Invesco QQQ Trust Series (QQQ)
: $473.60 (0.1% up)*
iShares Russell 2000 ETF (IWM)
: $220.28 (1.2% up)*
Energy Select Sector SPDR Fund (XLE)
: Outperformed, up 1.2%*
Health Care Select Sector SPDR Fund (XLV)
: Lagged, down 0.9%Moderna Inc. (MRNA) saw a significant surge of over 6% after receiving approval from Health Canada for its updated SPIKEVAX COVID-19 vaccine. This vaccine is designed to target the KP.2 sub-lineage of SARS-CoV-2 in individuals aged six months and older.
GE Vernova Inc. (GEV) climbed 3.5% following an upgrade from Bank of America. The financial institution raised its rating on the stock from Neutral to Buy and increased the price target from $200 to $300.
Hewlett Packard Enterprise Co (HPE) advanced nearly 5% after Bank of America also upgraded its rating from Neutral to Buy and boosted the price target from $21 to $24.
This information reflects the market sentiment as of Tuesday’s close. Keep in mind that market conditions can change rapidly.
