Stocks Rise as Oil Prices Drop Ahead of Earnings Season

U.S. stock markets showed gains on Tuesday, with major indexes on track to reach new highs. The S&P 500 rose 0.5%, approaching its August record, while the Dow Jones Industrial Average climbed 185 points, or 0.4%. The Nasdaq composite added 0.6%, extending its own all-time high from the previous day. The rally was supported by a decline in oil prices, with Brent crude dropping 2.3% to $97.97 per barrel, easing inflationary pressures.

The drop in oil prices also helped calm tensions in the bond market, with the yield on the 10-year Treasury falling to 5.28% from 5.31%. This relief comes amid rising yields worldwide, which have been slowing economic growth by increasing borrowing costs and reducing investor appetite for high-priced stocks.

Among notable movers, Constellation Energy Group surged 11.5% after announcing a long-term deal to supply Google with electricity equivalent to a new nuclear reactor. The demand for electricity and construction materials is rising due to the boom in data centers for artificial-intelligence technology. Option Care Health soared 32.9% following a $5.8 billion acquisition by CD&R and McKesson, which is paying $32.05 per share.

Strong corporate profits have been a key driver of the market's resilience despite high inflation, expensive oil, and bond market concerns. Lamb Weston, a frozen fries and potato products company, reported better-than-expected quarterly profits and revenue, prompting a 7.3% stock increase. The company raised its full-year profit forecast despite inflation-related cost increases.

Analysts expect S&P 500 companies to report a third straight quarter of profit growth above 25%. Earnings reports for the July-to-September period are highly anticipated. Internationally, European and Asian markets saw mixed movements, with France experiencing protests over school funding and Japan's Nikkei 225 rising 1.1%.