S&P 500 and Nasdaq Hit Records as Yields and Oil Prices Ease

The S&P 500 and Nasdaq Composite hit new record highs on Tuesday as the 10-year Treasury yield eased slightly. The yield dropped by about 5 basis points after reaching its highest level since 2002 on Monday. This relief in bond yields helped rate-sensitive stocks, including the Dow Jones Industrial Average, which had previously lagged behind the broader market.

Oil prices also contributed to the positive sentiment, with Brent crude trading near $99 per barrel and WTI crude near $88. The combination of lower oil prices and easing bond yields reduced some pressure on inflation concerns. Meanwhile, AI-related stocks continued to lead the market, with Nvidia adding 1.1% and nearing a $6 trillion market value. Other tech giants like Meta, Tesla, Amazon, and Microsoft also saw gains.

Constellation Energy was the top performer in the S&P 500, surging 13.9% after Google announced a 3,590-megawatt power deal with the company. Option Care Health also saw a significant rise of 32.7% following a $5.8 billion acquisition deal by McKesson and Clayton Dubilier & Rice. Despite the broad market gains, the Nasdaq still recorded more new 52-week lows than highs, indicating some underlying weakness.

As third-quarter earnings season approaches, analysts expect over 30% earnings growth for the S&P 500, largely driven by AI-related companies. However, with long-term rates remaining elevated, there is little room for disappointment. December E-mini S&P 500 and Nasdaq-100 futures both showed strong bullish trends, supported by technical indicators and recent record highs.