The U.S. stock market was trending higher as of lunchtime Tuesday, with all major averages showing slight gains for the session, as investors resisted placing big wagers ahead of tomorrow’s key inflation report.

On the data front, the NFIB Small Business Optimism Index rose to 91 in June, surpassing market expectations of 89.9, and surging to the highest level since November 2022.

Markets are currently pricing in a 95% likelihood of another rate hike at the July meeting, although uncertainties remain over an additional rate hike at the other Fed meetings later in the year.

Meanwhile, oil prices rose over 2% to the highest mark since early May as the Energy Information Administration (EIA) upped its 2023 oil demand prediction, emphasizing that OPEC+ production restrictions may cause demand to rise faster than supply. The agency increased its forecasts for oil demand in 2023 from 1.6 million barrels per day above 2022 levels to 1.8 mb/d, while decreasing its estimate for oil demand in 2024 from 1.7 mb/d to 1.6 mb/d.

Cues From Tuesday’s Trading

The S&P 500 Index rose 0.3%, the Nasdaq 100 Index edged 0.2% higher, and the Dow Jones added over 200 points or 0.6%.

Small caps in the Russell 2000 index rose 0.5%.

US Index Performance On Tuesday

Analyst Color: The economy's strength despite the rising real interest rates and dwindling liquidity has left Wharton professor Jeremy Siegel impressed.  But the economist said the second half of the year may not be a great time for the markets. Neither does he see a dramatic deterioration.

"There will be a battle in the market dynamics between recession fears and a slowdown, with thoughts the Fed will respond by bringing in more accommodation and lowering rates," he said.

Almost all U.S. equity sectors were positive, except for the the Technology Select Sector SPDR Fund (NYSE:XLK) and the Health Care Select Sector SPDR Fund (NYSE:XLV), down 0.2% and 0.3%, respectively.

The best performer was the Energy Select Sector SPDR Fund (NYSE:XLE), up 2%, followed by the Financial Select Sector SPDR Fund (NYSE:XLF), up 0.9%.

See also: How To Trade Futures

Stocks In Focus:

Commodities, Bonds, Other Global Equity Markets:

Crude oil rose 2%, with a barrel of WTI-grade crude trading at $74. The United States Oil Fund ETF (NYSE:USO) was 2.1% lower to $66.9.  

Treasury yields held flat, with the 10-year yield at 3.97% and the two-year yield at 4.87%. The iShares 20+ Year Treasury Bond ETF (NYSE:TLT) was 0.6% higher for the day. 

The dollar fell, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:UUP), down 0.2%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust (NYSE:FXE), was 0.1% higher to 1.1005.

European equity indexes closed in the green. The SPDR DJ Euro Stoxx 50 ETF  (NYSE:FEZ) rose 0.9%. 

Staff writer Piero Cingari updated this report midday Tuesday. 

Read Next: Wharton’s Jeremy Siegel Says ‘YOLO’ Consumers Driving Economy But Warns ‘This Could Be One Of Last Good Stretches'

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