S&P 500 and Nasdaq Hit New Highs as Treasury Yields Ease

The S&P 500 and Nasdaq Composite reached new record highs on Tuesday, driven by a decline in Treasury yields and a drop in oil prices. Most of the 'Magnificent Seven' stocks, including Meta, Tesla, Amazon, and Microsoft, saw gains ranging from 0.5% to 1.7%. Nvidia's 1.1% rise pushed its market valuation close to $6 trillion, reflecting strong investor confidence in the AI sector.

Investors remain optimistic ahead of the upcoming quarterly earnings season, with expectations of over 30% year-over-year growth in S&P 500 earnings, largely fueled by AI-related stocks. David Miller, chief investment officer at Catalyst Funds, noted the resilience of the economy and strong corporate earnings, but cautioned that rising interest rates have raised the hurdle for equity investments.

Government bond yields eased across the curve, with the benchmark 10-year Treasury yield falling by 5.3 basis points. A softer payrolls report last week reduced the likelihood of an October interest rate hike to near 79%, though a December hike remains largely anticipated. Four Federal Reserve officials, including New York Fed President John Williams, were scheduled to speak on Tuesday.

All 11 S&P 500 sectors traded higher, led by utilities and real estate. Oil prices dropped around 2% due to resilient Middle Eastern crude exports and a G7 emergency stockpile release. Marvell Technology surged 6.5% after raising its 2028 revenue forecast to $20 billion, citing strong data center chip demand. AMD gained 3.6% following CEO Lisa Su's announcement of increased chip supply to meet AI demand.