US Stocks Rebound As Treasury Yields, Dollar Fall On Dovish Fed Remarks, Gold Hits $2,040: What's Driving Markets Tuesday?

U.S. stocks experienced a welcome resurgence on Tuesday, buoyed by the latest comments from Federal Reserve officials.

Federal Reserve Governor Christopher Waller indicated that if inflation continues its downward trajectory over the next few months, there could be strong economic justification for reducing the policy rate.

“If inflation consistently declines, there is no reason to insist that rates remain really high,” Waller said.

In a similar vein, Chicago Fed President Austan Goolsbee has noted that the current deceleration in inflation is the most significant in 71 years, while New York Fed President John Williams, has characterized the drop as a positive development. On the contrary, Fed Governor Michelle Bowman acknowledged the need for further policy tightening to bring inflation in line with the Fed’s target.

These dovish signals from the Fed officials led to a noticeable decline in Treasury yields. The policy-sensitive two-year yields dropped by 12 basis points, descending to 4.76% — a level last observed in early August. This decrease reflects the market’s reassessment of the interest rate trajectory following the Fed officials’ comments.

The U.S. dollar index, as measured by the Invesco DB USD Index Bullish Fund ETF UUP, fell 0.5%, slipping below the 103 mark.

This downward movement in the dollar index was mirrored by a notable uptick in gold prices. The SPDR Gold Trust GLD saw a 1.4% increase, reaching $2,040, its highest level since May. Now, it stands just 2% below its all-time highs.

Performance Of US Stock Indices Tuesday

• The SPDR S&P 500 ETF Trust SPY rose 0.28% to $455.77.
• The SPDR Dow Jones Industrial Average ETF DIA edged 0.5% higher to $354.90. 
• The Invesco QQQ Trust QQQ rose 0.27% to $390.17.
• The iShares Russell 2000 ETF IWM held steady at $178.73, according to Benzinga Pro data.

Chart Of The Day: Gold Prices Eye All-Time Highs

Sector, Industry ETF Performance

The utilities and energy sectors showed the strongest performance in equities, with both the Utilities Select Sector SPDR Fund XLU and the Energy Select Sector SPDR Fund XLE posting gains of 0.6%.

On the other hand, health care lagged behind, as the Health Care Select Sector SPDR Fund XLV declined by 0.2%.

Among equity industries, gold miners demonstrated significant strength, with the VanEck Gold Miners ETF GDX surging by 4.4%.

Conversely, biotech, as represented by the SPDR Series Trust SPDR S&P Biotech ETF XBI, underperformed, recording a 0.6% decrease in value.

Latest Economic Data

The Conference Board’s latest report reveals a resurgence in U.S. consumer confidence for November, defying earlier expectations.

The consumer confidence index surged from a downwardly revised 99.1 in October to a reading of 102 in November, according to the latest data released Tuesday. This surpassed market expectations of a 101.6 reading.

Stocks In Focus

• Newmont Corp. NEM rallied over 5%, marking the best performance among S&P 500 stocks, reflecting rising gold prices.
• PDD Holdings Inc. PDD rallied over 18.4% after reporteding third-quarter earnings of 11.61 Chinese yuan.
• PayPal Holdings Inc. PYPL rose 3.1%.
• Zscaler, Inc. ZS rose less than 1%, in a volatile session, following a double earnings beat.
• GameStop Corp. GME rose 11% on heavy trading volume Tuesday despite a lack of company-specific news. 
• Micron Technology Inc. MU fell 2.7% despite the company raising its first-quarter outlook, which surpassed estimates.

Commodities, Bonds, Other Global Equity Markets And Crypto

The United States Oil Fund, LP USO, which tracks the performance of light sweet crude, was 2.6% higher.

Gold, as monitored through the SPDR Gold Trust GLD, rose 1.4% to $2,041/oz. Silver rose 1.3% to $24.94.

European equity indices fell. The SPDR DJ Euro STOXX 50 ETF  FEZ edged 0.1% higher.

Bitcoin BTC/USD was 2.7% higher to $38,241, while Ethereum ETH/USD rose 2.3% to $2,072.

Shanthi Rexaline contributed to this report.

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