Lower Crude Oil Prices Boost Stocks as Inflation Risks Ease
Stocks closed higher on Tuesday, as lower crude oil prices eased inflation risks and sent bond yields lower. The S&P 500 Index rose by +0.32%, while the Nasdaq 100 Index gained +0.64%. Crude oil prices fell more than -3% after a news report suggested the US would return diplomats to Middle East embassies, easing concerns about an escalation of the Iran war.
Chipmakers and AI-infrastructure stocks led gains in the broader market, with Marvell Technology and Advanced Micro Devices rising by over +4%. Nvidia's quarterly earnings results, set for release after the close on Wednesday, also contributed to short covering in chipmakers. The outlook for strong Q2 earnings is a bullish factor for stocks, with the S&P 500 tracking for earnings growth of almost 32%.
However, weakness in energy producers and software stocks limited gains in the broader market. Energy companies retreated as WTI crude oil prices fell to a 1-week low, while software stocks declined after weaker-than-expected reports on July new home sales and August consumer confidence.