Stocks Soar On Tech Rally; Inflation Fuels Higher Yields, Bitcoin Drops Below $70,000: What's Driving Markets Tuesday?

It was a mixed morning on Wall Street, with major U.S. indices recording gains, primarily due to a tech outperformance, although losses emerged on bonds, gold, and Bitcoin following a stronger-than-expected inflation report.

The S&P 500 index rose by 0.9%, while the tech-heavy Nasdaq 100 rallied 0.9%. Within the tech space, chipmakers shined, with the VanEck Semiconductor ETF SMH up 2%.

The February Consumer Price Index (CPI) rose by 3.2% year-on-year, exceeding both the previous and expected 3.1% surge. Additionally, the core CPI index, which strips out volatile food and energy items, surprised to the upside at 3.8%, compared to the expected 3.7%.

Treasury yields moved higher, with the policy-sensitive two-year yield soaring by 6 basis points to 4.6% and the 10-year yield rising by 7 basis points to 4.17%.

Markets held firm on expectations for a June rate cut, envisioning a 70% chance, according to the CME Group FedWatch tool.

The Fed is set to hold its two-day policy meeting in a week, during which policymakers will unveil the new macroeconomic projections, revealing the preferred interest rate path.

Tuesday’s Performance In Major US Indices, ETFs

The SPDR S&P 500 ETF Trust SPY rose 0.8% to $515.04, the SPDR Dow Jones Industrial Average DIA inched 0.4% higher to $389.95 and the tech-heavy Invesco QQQ Trust QQQ rose 1% to $441.69, according to Benzinga Pro data. 

Sector-wise, the Technology Select Sector SPDR Fund XLK, was the top performer, up by 1.4%, while the Utilities Select Sector SPDR Fund XLU trailed, down by 0.7%.

 Tuesday’s Stock Movers

• Oracle Corp. ORCL rallied over 12% after reporting better-than-expected quarterly results.
• Taiwan Semiconductor Manufacturing Company Ltd. TSMC rose over 3% after obtaining grants worth over $5 billion from the U.S. Department of Commerce for chip production.
• Southwest Airlines Company LUV tumbled 15% after announcing a sharp decline in Boeing 737-8 plane deliveries, from the 79 previously expected to 46 for 2024.
• Other stocks moving on earnings were Asana, Inc. ASAN (down about 11%), Vail Resorts, Inc. MTN (up 1.5%), Archer-Daniels-Midland Company ADM (up 4.5%), International Game Technology PLC IGT (down over 6%) and Kohl’s Corporation KSS (down over 5%).

Read now: Inflation Tops Forecasts In February – ‘I Think Powell Will Be Upset’: 7 Economists React

Wall Street illustration created using AI via MidJourney.