Wall Street rallies as Treasury yields and oil prices ease
Wall Street opened higher on Tuesday as Treasury yields and oil prices eased, setting a positive tone for investors ahead of the third-quarter earnings season. The Dow Jones Industrial Average surged 227 points, while the S&P 500 gained 0.49% and the Nasdaq Composite added 0.57%. The S&P 500 remained about 0.6% below its record high from Monday, while the Nasdaq Composite closed at a new high on Monday, boosted by strong gains in major technology stocks.
Technology stocks led the gains on Tuesday, with Nvidia rising 0.9%, bringing its market value close to $6 trillion. Advanced Micro Devices gained about 0.12% after CEO Lisa Su announced plans to substantially increase chip supply in 2027 to meet strong demand for AI-related products. Broadcom also traded higher, along with most of the so-called Magnificent Seven stocks, including Meta, Tesla, and Amazon. The technology sector has been a key driver of US equities' outperformance over the past six months, despite higher energy prices and bond market volatility.
Investors are preparing for the third-quarter earnings season, which begins next week with results from major US banks. Analysts expect S&P 500 earnings to increase more than 30% year over year, with AI-related companies expected to contribute significantly to this growth. Meanwhile, the 10-year Treasury yield fell about 3 basis points to 5.29%, and the 30-year yield declined more than 2 basis points to 5.66%, both having reached multi-year highs on Monday. A weaker-than-expected US payrolls report last week reduced expectations for another Federal Reserve rate increase this month, with traders pricing in a 78% probability that the Fed would keep rates unchanged at its October meeting.
Oil prices also declined, providing another boost to equities. Brent crude fell about 2.3% to around $98 a barrel, while West Texas Intermediate futures dropped about 1.49% to roughly $88. The decline followed an increase in Middle Eastern crude exports and the G7’s decision to release emergency stockpiles, easing concerns about near-term supply. The S&P 500 energy sector ETF also fell about 1%. Additionally, Option Care Health jumped 32.8% after McKesson and Clayton Dubilier & Rice agreed to acquire the company in a transaction worth about $5.8 billion, including debt. Constellation Energy rose 12.7% after Google entered a 3,590-megawatt power agreement with the company.