Stocks Rally As Israel Regains Ground, Dollar Slides On Fed's Dovish Tone: What's Driving Markets Tuesday?

U.S. stocks experienced a robust rally as of midday trading Tuesday in New York, with Wall Street mirroring the positive sentiment seen in Asia and Europe.

As the conflict entered its fourth day following an unexpected attack by Hamas on Israel, recent developments in the Middle East have seen the Israel Defense Forces advancing into Palestinian territory. This comes after the Israeli government ordered the cessation of supplies such as water, electricity, fuel and food to Gaza overnight.

Benjamin Netanyahu‘s government is attempting to negotiate an agreement with opposition forces to form an emergency government to address the critical phase of the conflict.

Israeli high-tech companies, tracked by Cathie Wood‘s ARK Israel Innovative Technology ETF IZRL and the BlueStar Israel Technology ETF IZRL, were recording gains of 2.3% and 2%, respectively.

Atlanta Federal Reserve President Raphael Bostic said further interest rate hikes by the Fed might not be necessary, echoing comments made by Federal Reserve Bank of Dallas President Lorie Logan, who mentioned on Monday that the surge in long-term rates could reduce the need for additional tightening.

The positive momentum was widespread, with 449 companies in the S&P 500 posting gains and all sectors in the green.

The standout performers of the day were solar-related stocks, including Enphase Energy Inc. ENPH, First Solar Inc. FSLR, and SolarEdge Inc. SEDG, which recorded gains ranging from 5% to 7%.

Cues From Tuesday Trading:

The S&P 500 rose 1.1%, while the tech-heavy Nasdaq 100 slightly outperformed the broader market, gaining 1.2%.

Blue-chip stocks in the Dow Jones rose 0.8%, while small caps in the Russell 2000 rallied 1.7%

US Index Performance On Tuesday

Tuesday’s Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was 0.9% higher to $436.27.
• The SPDR Dow Jones Industrial Average ETF DIA rose 0.6% to $337.82.
• The Invesco QQQ Trust QQQ rose 0.8% to $370.17, according to Benzinga Pro data.

Looking at S&P 500 sector ETFs:

• The Materials Select Sector SPDR Fund XLB saw the largest gains for the day, up 1.6%, followed by the Consumer Discretionary Select Sector SPDR Fund XLY, up 1.4%.
• The Energy Select Sector SPDR Fund XLE was the relative laggard, up 0.4%.

Minneapolis Fed President Neel Kashkari is scheduled to speak at 3 p.m. EDT. Kashkari is also a member of the FOMC, the rate-setting committee of the Fed.

See Also: How To Trade Futures

Stocks In Focus:

• Bank of America Inc. BAC rose 3.3%, leading gains among bank stocks as traders prep for their upcoming earnings reports.
• Rivian Automotive, Inc. RIVN gained more than 3% following an upgrade of the stock by UBS.
• Lucid Group Inc. LCID rallied 6.4% after hitting all-time lows on Monday.
• Chinese EV maker NIO Inc. NIO rose over 5% on stimulus hopes arising from Beijing.
• PepsiCo Inc. PEP rose nearly 2% following its beat-and-raise third quarter.

Commodities, Bonds, Other Global Equity Markets:

Crude oil fell 0.6%, with a barrel of WTI-grade crude trading at $84.60. The United States Oil Fund ETF USO was 0.3% lower to $76.90.  

Treasury yields were mixed, with the 10-year yield flat at 4.64% and the two-year yield up by 3 basis points to 4.96%. The iShares 20+ Year Treasury Bond ETF TLT was unchanged 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 1.0602.

European equity indices rallied substantially. The SPDR DJ Euro STOXX 50 ETF  FEZ rose 1.4%. 

Gold edged 0.1% down to $1,860/oz, while silver fell 0.2% to $21.80. Bitcoin BTC/USD was 1% lower to $27,358.

Staff writer Piero Cingari updated this report midday Tuesday. 

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