Stocks Surge On Dismal Jobs Data, Rate Hike Fears Ease: What's Driving Markets Tuesday?

Midday trading on Tuesday saw a rally in stocks as investors bet the Federal Reserve would hold off on raising interest rates amid the latest weaker-than-expected economic data. 

The JOLTs report showed that in July there were 8.8 million job openings, down 338,000 from June and far lower than the 9.465 million openings predicted by economists.

Similarly, August’s reading of 106.1 on the Conference Board’s consumer confidence index was the lowest since February 2021 and significantly lower than the 117.1 that was expected by experts.

The dollar dropped, U.S. Treasury yields declined, and stocks rose across the board as a result of the negative economic news.

The market-implied probability of a Fed rate hike in September plummeted from 22% to as low as 13%. Markets also reduced the likelihood of a rate hike by November from 66% to 49%, according to the CME Group Fed Watch tool.

Among mega-cap names, Tesla Inc. TSLA soared over 6% and NVIDIA Corp. NVDA gained over 4%.

Cues From Tuesday's Trading:

The S&P 500 rose 1.3%, on track for its third straight session of gains. The Dow rose 0.6%, breaking above its 50-day moving average.

Tech stocks outperformed with the Nasdaq 100 index rising nearly 2%, on track for its strongest session since the end of May.

The Russell 2000 rose 1.3%, on its best trading day since the end of July.

US Index Performance On Tuesday

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Tuesday’s Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was 1.2% higher to $447.90
• The SPDR Dow Jones Industrial Average ETF DIA rose 0.6% to $347.76 
• The Invesco QQQ Trust QQQ rose 1.9% to $373, according to Benzinga Pro data.

Among S&P 500’s sectors:

• The Energy Select Sector SPDR Fund XLE was the underperformer falling 0.2%.
• The Consumer Discretionary Select Sector SPDR Fund XLY, the Technology Select Sector SPDR Fund XLK and the Communication Services Select Sector SPDR Fund XLC rose by 2%, 1.9% and 1.8% respectively.

Stocks In Focus:

• PDD Holdings Inc. PDD rose 16% after reporting better than predicted revenues last quarter.
• Ginkgo Bioworks Holdings, Inc. DNA rose 21% after the company announced a five-year partnership with Alphabet Inc.‘s GOOG GOOGL Google Cloud, under which Ginkgo will develop AI tools for biology and biosecurity.
• Coinbase Global Inc. COIN rose 13% after Grayscale won its lawsuit against the SEC over the regulator’s rejection of an application to convert its fund to a spot Bitcoin ETF. Marathon Digital Holdings Inc. MARA and Riot Platforms Inc. RIOT rose 25% and 18%, respectively.
• NovoCure Limited NVCR soared 16%, after falling 37% a day earlier.
• Companies reporting after the close are Ambarella, Inc. AMBA, Box, Inc. BOX, Hewlett Packard Enterprise Co. HPE, HP, Inc. HPQ and PVH Corp. PVH.

Commodities, Bonds, Other Global Equity Markets:

Crude oil rose 0.6%, with a barrel of WTI-grade crude trading above $80. The United States Oil Fund ETF USO was 0.4% higher to $72.73.  

Treasury yields were lower, with the 10-year yield down to 4.12% and the two-year yield down by 17 basis points to 4.88%. The iShares 20+ Year Treasury Bond ETF TLT rose 1% for the day. 

The dollar fell, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, down 0.3%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.4% higher to 1.0855.

European equity indices closed in the green. The SPDR DJ Euro STOXX 50 ETF  FEZ rose 1%. 

Gold edged 0.8% up to $1,935/oz, while silver rose nearly 2% to $24.69. Bitcoin BTC/USD was 7% higher to $27,915.

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Staff writer Piero Cingari updated this report midday Tuesday. 

Photo: Shutterstock