Stocks continued their impressive winning streak on Tuesday, marking the seventh consecutive session of gains. Investors displayed renewed confidence as speculation swirled about the Federal Reserve potentially concluding its tightening campaign this year. The tech-heavy Nasdaq Composite (^IXIC) led the charge, surging by 0.9%, while the S&P 500 (^GSPC) inched up by nearly 0.3%. The Dow Jones Industrial Average (^DJI) also registered a solid performance, increasing by almost 0.2%, equivalent to close to 60 points.
The recent signals of a weaker U.S. economy have fueled optimism in the market, leading to the belief that the Federal Reserve may scale back its rate hikes. However, central bankers have emphasized that the door remains open for additional increases, even if they opt for a temporary pause.
Despite the market’s rising optimism, cautious voices, including Minneapolis Fed President Neel Kashkari, served as a reminder of potential economic challenges. Kashkari reiterated his concerns on both Monday and Tuesday, suggesting that the central bank likely still has work to do to control inflation. Other members of the Federal Reserve echoed these concerns, setting the stage for Chairman Jerome Powell’s upcoming remarks later this week.
Michael Hewson, Chief Market Analyst at CMC Markets UK, offered insights into the evolving sentiment, stating, “There was quite a bit of euphoria at the end of last week on the belief that the Fed is done, the jobs market is slowing, that the U.S. economy is going to experience a soft landing. People have started to become a bit more clear-eyed. There is the risk that the Fed could rise again.”
The Federal Reserve’s potential to raise interest rates exerted downward pressure on oil prices, which dipped below $80 a barrel for the first time in over two months. This occurred despite the prospect of supply cuts from Saudi Arabia and Russia. Contributing to the decline in oil prices was the latest Chinese trade data, which revealed weaker exports and imports. On a positive note, the International Monetary Fund adjusted its GDP growth forecasts for China this year and the next.
Amidst the financial landscape, WeWork made headlines by filing for bankruptcy on Monday, reflecting the fall from grace of the once most valuable U.S. startup, grappling with expensive leases. WeWork’s shares have plummeted by approximately 98% over the course of this year.
Simultaneously, earnings season remained in full swing, with Uber and Rivian announcing their results on Tuesday, and Disney scheduled to unveil its figures on Wednesday.
As Tuesday’s trading session concluded, stocks extended their winning streak to seven consecutive sessions, buoyed by growing confidence in the Federal Reserve’s potential to conclude its rate-tightening policies this year. Nevertheless, the market remained cautious due to the divergence in opinions among Federal Reserve members.
Source: Yahoo Finance
