Following a significant sell-off, investors returned, and the S&P 500 and Nasdaq increased by 1%. Recession worries were allayed by Federal Reserve members’ forceful remarks. Trading expects the upcoming Fed meeting to include rate cuts. While Uber and Caterpillar announced excellent earnings, Nvidia lifted the indexes.
In 2024, the Nasdaq is up 9%. Tuesday saw a 1% increase in the S&P 500 and Nasdaq as investors returned to the market following a sharp sell-off, as recent remarks from Federal Reserve officials allayed fears of a US recession. The three main market indexes closed the day significantly below their daily highs, even though the Dow increased as well.
Economy Is About Enter To Recession
The argument that the economy is about to enter a recession due to July’s jobs statistics being worse than anticipated has been refuted by U.S. central bank policymakers, but they have also cautioned that the Fed will need to lower interest rates in order to prevent this from happening.
As fears of a U.S. recession increased due to bad economic data, stocks had dropped sharply. According to the CME Group’s FedWatch Tool, traders are pricing in a 75% possibility that the Fed will reduce rates by 50 basis points at its upcoming policy meeting in September, as well as a 25% chance of a drop of just 25 basis points.
Financials and real estate saw the biggest gains among the four S&P 500 sectors when the market closed. The largest gains for the S&P 500 and Nasdaq came from the technology megacap Nvidia, which increased by almost 4%.
The S&P 500 climbed 53.7 points, or 1.04%, to 5,240.03, the Nasdaq Composite improved 166.77 points, or 1.03%, to 16,366.86, and the Dow Jones Industrial Average increased 294.39 points, or 0.76%, to 38,997.66.
Declining Demand In North America
The euphoria surrounding artificial intelligence and robust results earlier in the year have propelled the Nasdaq Composite’s 9% gain thus far in 2024. “While (recent) earnings were good, in many cases they weren’t great,” Meckler stated.
According to LSEG data, the S&P 500 was last trading at 20 times future 12-month earnings forecasts, which is higher than its long-term average of 15.7.
Following a surprise rate hike by the Bank of Japan last week, investors reduced their yen-funded trades, which had been utilised for years to finance the purchase of equities, exacerbating recent market fears. Chair Jerome Powell’s address in Jackson Hole, Wyoming, on August 22–24, is the next major Fed event.
Due in part to consistent demand for its services, Uber exceeded Wall Street projections for second-quarter revenue and core profit, causing its shares to soar 11%. Caterpillar increased its profits by 3% in the second quarter, surpassing experts’ projections, as declining demand in North America was offset by higher costs for its larger excavators and other equipment.
