Dow closes nearly 300 points higher to snap three-day losing run in broad relief rally: Live updates
Stocks jumped Tuesday, recovering some losses from the previous three trading days as investors took a pause from recession fears and Japanese equities rallied.
gained 1.03% to settle at 16,366.85. The major averages snapped a three-day stretch of losses.
All 11 sectors of the broad market index were positive for the day. Several megacap tech stocks also rebounded after a sharp pullback on Monday. Nvidia
rose 3.8%, while Meta Platformsadvanced 3.9%.
Helping sentiment was a rebound in Japanese stocks. The Nikkei 225
posted its best day since October 2008, soaring 10.2%. That surge comes a day after the benchmark suffered its worst session since 1987, losing 12.4%.
Volatility will likely remain elevated in the near term as the yen carry trade continues to unwind, said Ross Mayfield, investment strategist at Baird.
“I wouldn’t be surprised if there were some more pressure in the coming weeks, but I do think that the growth scare is overdone,” he said.
The labor market is still relatively healthy despite some cooling, and other economic indicators still appear robust, Mayfield added. “While I think the market volatility could continue, I’m less worried about the underlying fundamentals.”
The moves follow a sharp sell-off during Monday trading amid concerns over the state of the economy. The 30-stock Dow dropped 1,033.99 points, or 2.6%, while the S&P 500 slid 3%. Both indexes notched their worst sessions since September 2022. The Nasdaq Composite shed 3.4%.
A major unwind in the yen carry trade also contributed to the volatility. The Bank of Japan last week raised interest rates, contributing to a rise in the yen. That’s affected the practice of traders borrowing in the cheaper currency to purchase other global assets. However, the yen retreated Tuesday following sharp spikes that added to worries over the carry trade.
Stocks close in the green Tuesday
U.S. stocks ended Tuesday’s trading session higher, managing to break a three-day losing streak.
The S&P 500 and the Nasdaq Composite advanced 1.04% and 1.03%, respectively. The Dow Jones Industrial Average gained 294.39 points, or 0.76%.
— Hakyung Kim
Market pullbacks are normal, says LPL Financial
Although the market sell-off in the three trading session until Monday’s close may seem worrying to investors, LPL Financial notes that in 94% of the years since 1928, the market has experienced a pullback of at least 5%.
“While such sharp declines in equity prices are concerning, looking back at historic data on the S&P 500 index reminds us that dips, pullbacks and corrections of 10% or more are a normal and healthy part of any bull market. On average, stocks experience a pullback of over 5% over three times per year and a correction of 10% or more around once per year — even in positive years,” portfolio George Smith wrote in a Tuesday note.
With this in mind, investors should stay exposed to the market and remain patient, Smith added.
— Hakyung Kim
David Einhorn sees elevated inflation in the years ahead
Greenlight Capital’s David Einhorn believes the outcome of the U.S. presidential election is insignificant to the markets, as he sees elevated inflation on the back of a burdening fiscal deficit under both candidates.
“From a market perspective, we don’t think it matters very much who wins,” Einhorn wrote in a letter to investors dated Tuesday. “The economic policies of both parties are remarkably similar. Both favor large deficits despite a strong economy. We believe this supports our ongoing expectations of higher secular inflation in the coming years.”
— Yun Li
Japan stock sell-off a move toward normalization, says former BoJ member
Although the Nikkei 225′s losses on August 5 marked the index’s largest decline ever, the decline is not indicative of another global financial crisis like in 2008, according to Takahide Kiuchi, exectuve economist at the Nomura Research Institute and former member of the policy board at the Bank of Japan.
“The panic is centered on Japan, and there is not yet a strong indication of a global financial crisis. The drop in stock prices is exceptionally large in Japan, while the declines in other countries’ stock prices are still relatively small in comparison,” said Kiuchi. “Currently, it is a ‘Japan panic,’ a situation of turmoil in the financial market centered on Japan.”
The economist believes the market has yet to adjust for the yen depreciation and Japanese equity appreciation in 2023. If more “adjustments” happen, Kiuchi believes the Nikkei could have around 17% downside potential, and the dollar-yen rate may fall to around 130 yen, he added.
— Hakyung Kim
Markets are going through a “growth scare,” Ritholtz’ Callie Cox says
The market’s recent pullback is an opportunity to dig for value, according to Callie Cox, chief market strategist at Ritholtz Wealth Management.
“When you’re in a bull market, you have to expect 5% to 10% corrections,” Cox said Tuesday on CNBC’s ‘Money Movers.’ “Right now, we’re going through a growth scare... I don’t think growth is quite as bad as people think. I don’t think the job market is broken — even though it’s slowing down.”
According to Cox, investors should maintain their faith in “unloved areas” of the bull market, such as small-caps and other rate-sensitive groups that she believes still have room to run. Cox added that she’s looking to see strong earnings results from companies beyond the tech sector.
— Pia Singh
Stocks usually climb in the six months after a big VIX spike, Strategas says
Monday’s spike in the Cboe Volatility Index
could be a good sign for stocks in the medium term, if history is any indication, according to Strategas strategist Todd Sohn.
“A VIX over 30 indicates a top decile reading (we are there)… historically, that’s where above average returns over the next 6-months come into play,” Sohn said in a note to clients.
The average forward six-month return for the S&P 500 in these situations since 1990 is nearly 12%, according to Sohn. And 81% of the observations are positive, the note said.
— Jesse Pound
Stocks making midday moves
Here are some of the names moving in midday trading:
- — The stock rallied nearly 12% after the defense tech company raised its full-year revenue forecast. Palantir now anticipates revenue between $2.742 billion and $2.750 billion, up from its previous guidance of $2.68 billion to $2.69 billion.
To see more stocks making midday moves, read the full story here.
— Michelle Fox
Tuesday rebound isn’t necessarily a ‘relief rally,’ Piper Sandler says
Stocks picked up on Tuesday after seeing a sharp sell-off on Monday and ending well off the morning lows. Still, that’s not enough to indicate whether the broad-market index is headed for a sustainable rebound, according to Piper Sandler.
“Tactically, this stretched downside set up for a ‘Turnaround Tuesday,’ but it is too early to tell if its more than just a relief rally,” analyst Craig Johnson said in a Tuesday note.
Johnson maintained a year-end target of 5,800 for the S&P 500
.
— Pia Singh
Market correction is ‘not yet over,’ says Goldman Sachs’ Peter Oppenheimer
Investors should brace for more market volatility following Monday’s global sell-off, according to Peter Oppenheimer of Goldman Sachs.
“My feeling is that this correction, although is stabilizing, is not yet over,” the firm’s chief global equity strategist told CNBC’s “Squawk on the Street.” “We’re still going to see, I think, some choppy environments in the short-term as investors really start to calibrate and get more confident again about the direction of interest rates and the economy.”
However, Oppenheimer doesn’t necessarily think the correction is bad for the market. He instead views it as “healthy and somewhat inevitable after such a long period without a pullback.”
“At the same time, I think we’re not in a bear market, and there are going to be some good opportunities here,” he continued.
— Sean Conlon
bounced 2% on Tuesday after dropping 3% during Tuesday’s session.
led the gains in the concentrated index, jumping more than 6%. Shares of Nvidia and Meta Platforms bounced more than 5% each after falling 6.4% and 2.5%, respectively, during Monday’s session. PDD Holdings and Dexcomalso added at least 5%.
Semiconductor stocks ASML Holding
and Arm Holdings rose 4%, along with PayPal, Airbnb and CrowdStrike. Analog Devices, Broadcom and KLA Corporationedged up t least 3% each.
Ten stocks were in the red during midday trading. Warner Bros. Discovery
was the biggest laggard, slumping nearly 5%. Advanced Micro Devices and Modernalost about 2% each.
— Samantha Subin
Chips ETFs rise
Semiconductor ETFs posted gains on Tuesday as Nvidia and other chip companies bounced back from Monday’s losses.
jumped 2.1%.
Nvidia was up nearly 5% for the day, while Super Micro Computer and Broadcom ticked up 0.9% and 2.9%, respectively.
— Hakyung Kim
All S&P 500 sectors positive for the day
The eleven sectors in the S&P 500 were positive for the day. Real estate jumped 2%, leading the gains. Information technology was the second outperforming sector, rising 1.4%.
— Hakyung Kim
‘Let the dust settle’ before entering the market, says investor
Monday’s sharp market sell-off is actually “quite normal”; what was unusual was the lack of volatility over the last few weeks, according BMO Family Office chief investment officer Carol Schleif.
Schleif noted that August is historically a rocky month for the stock market due to lighter trader volumes.
As the market shows signs of recovery on Tuesday, Schleif advises investors to hold off for longer before increasing their equity exposure.
“While the broader stock market is on the brink of entering correction territory, it’s typically wise to let a bit of dust settle before putting new money to work as there is risk of catching a falling knife during a correction. We would characterize the recent market pullback as a textbook correction, after months of low volatility so far in 2024,” Schleif said.
— Hakyung Kim
Monday’s savage surge in VIX
Monday’s spike in the Cboe Volatility Index, or VIX, was the most dramatic since March 2020, shortly after the Federal Reserve’s emergency actions during the Covid-19 pandemic. The index broke above 65 on Monday morning at its peak, up from about 23 on Friday.
Jim Reid, Deutsche Bank’s head of global economics and thematic research, noted that at no point in the Great Financial Crisis did the Wall Street’s fear gauge surged higher on a percentage increase basis than Monday’s action.
“The savageness of the intra-day move shows how much short dated options trading has exploded over recent years,” Reid said in a note.
The VIX dropped 6 points to 32.5 Tuesday morning.
— Yun Li
Here’s how crypto ETFs did during Monday’s sell-off
Crypto markets saw a volatile weekend of trading that continued on Monday, but the new ETFs that track the market appear to have held up just fine.
For one, there does not appear to have been a stampede of redemptions at the fund. According to JPMorgan analyst Kenneth Worthington, spot bitcoin ETFs saw $169 million of net outflows on Monday, which is minor in a market with over $40 billion in assets.
The newer ether ETFs actually brought it more cash, with net inflows of $49 million, according to JPMorgan.
Additionally, the biggest funds in both groups appear to have closed within 1% of their net asset value on Monday, according to FactSet data. That means that their price fell sharply, along with the market, but the funds are designed to track the price of cryptocurrencies, not outperform them.
— Jesse Pound
S&P 500, Nasdaq rise Tuesday
The S&P 500 and Nasdaq Composite inched up Tuesday morning.
The broad market index gained 0.4%, while the tech-heavy Nasdaq advanced 0.5%.
Meanwhile, the Dow Jones Industrial Average traded near the flatline.
— Hakyung Kim
Stocks making the biggest moves premarket
Check out the companies making headlines before the bell:
- Palantir Technologies — The data analytics company rallied 11% after raising its full-year revenue forecast. Palantir now sees revenue between $2.74 billion and $2.75 billion. That’s up from a range of $2.68 billion from $2.69 billion.
- Yum China — Shares surged 8% after the Shanghai-based operator behind Pizza Hut and Taco Bell posted second-quarter earnings that beat expectations. Adjusted earnings of 55 cents per share came above the 47 cents per share earnings anticipated by analysts, according to LSEG. On the other hand, revenue of $2.68 billion disappointed the consensus estimate of $2.77 billion. Separately, the fast food company announced its finance chief is stepping down.
- Uber Technologies — Shares popped 6% after the ride-sharing company posted better-than-expected financial results for its second quarter. Earnings came in at 47 cents per share, topping the 31 cents expected from analysts polled by LSEG. Revenue was $10.7 billion, above the $10.57 billion consensus estimate.
— Sarah Min
Uber delivers earnings beat, CEO says consumer is still strong
Shares of Uber
jumped 8% in premarket trading after a better-than-expected report for the second quarter that could help calm fears about an imminent economic slowdown in the United States.
Uber reported 47 cents in earnings per share on $10.70 billion of revenue. Analysts surveyed by LSEG were expecting 31 cents per share on $10.57 billion of revenue.
The company also said it expects gross bookings to increase sequentially in the third quarter. CEO Dara Khosrowshahi said on “Squawk Box” that consumer demand for services such as Uber is still strong.
— Jesse Pound
Dollar bounces back against yen
The dollar index broadly gained on Tuesday as the Japanese yen weakened for the first day in August.
The greenback rose 0.3% against the yen at 144.62. The dollar index jumped 0.4% and was last at 103.10.
— Hakyung Kim
Trade deficit in June fell by less than forecast
The U.S. trade deficit declined in June but not by as much as expected, the Commerce Department reported Tuesday.
The goods and services shortfall fell to a seasonally adjusted $73.1 billion, down $1.9 billion from May but above the Dow Jones estimate for $72.5 billion. Exports rose $3.9% while imports, which subtract from GDP, were up $2 billion.
At the country level, the imbalance with China fell to $22.3 billion, down $1.6 billion.
—Jeff Cox
Palantir surges after increasing revenue guidance
The data analytics company rallied 11% after raising its full-year revenue forecast. Palantir now sees revenue between $2.74 billion and $2.75 billion. That’s up from a range of $2.68 billion to $2.69 billion.
That gain put Palantir
on track for its best day since Feb. 6, when it surged 30%.
— Fred Imbert
Caterpillar rises after earnings beat
Shares of the industrial giant popped more than 4% on the back of better-than-expected quarterly results. The company earned $5.99 per share on revenue of $16.69 billion in the second quarter. Analysts expected a profit of $5.54 per share on revenue of $16.68 billion.
A gain of that magnitude would be Caterpillar’s
biggest since Dec. 14, when shares surged 6%.
After Hours: Last | 5:38 PM EDT
+9.64 (+3.04%)— Fred Imbert
Late summer selloffs not unusual, says UBS
While multiple catalysts played into the market selloff in recent days, UBS strategist Andrew Garthwaite says he’s sticking to his year-end target for the global MSCI ACWI Index reaching 5% upside.
“We can see that sell-offs in July/August are not that unusual and have succeeded in spoiling many a summer holiday. Only in 2008 was the sell off at the start of a long lasting bear market,” Garthwaite wrote in a Monday note.
In the years 2007, 2010, 2011, 2013 and 2015, late-summer market sell-offs quickly reversed, the strategist added.
— Hakyung Kim
Europe markets open higher on Tuesday
European markets opened higher on Tuesday, with regional bourses and all sectors starting the day in the green.
The pan-European Stoxx 600 was last up 0.74% at 8:11 a.m. London time. Travel and leisure stocks led gains and were last up 1.59%, while banks and tech also rose. They had been among the most affected sectors in Monday’s stock market selloff.
Major regional indices were also higher, with the U.K.’s FTSE 100 adding 0.55%, France’s CAC 40 gaining 0.18% and Germany’s DAX rising 0.58%.
— Sophie Kiderlin
Korean and Japanese stocks rebound sharply at the open
South Korean and Japanese stocks opened sharply higher in Tuesday morning trade, rebounding from Monday’s sell-off.
Japan’s Nikkei 225
weakened to about 146 against the U.S. dollar.
South Korea’s Kospi
jumped more than 4% while the Kosdaq was about 5% higher.
— Christine Wang
Stocks can recover as Wall Street’s recession concerns are overstated, says BlackRock
Stocks will once again find their footing and recover from a global market sell-off as recession worries abates and the unwinding of the yen carry trade settles, according to BlackRock.
“We think risk assets can
recover as recession fears ease and the rapid unwinding of carry trades
stabilizes,” the firm’s Investment Institute wrote said. “We keep our
overweight to U.S. equities, driven by the AI mega force, and see the
selloff presenting buying opportunities.
“We think growth will
be supportive of risk assets and believe markets are pricing in too many
Fed rate cuts,” the note added. The firm also posits that the recent
weaker-than-expected jobs report that preceded the Friday market
sell-off more closely resembles a slowdown in hiring as opposed to a
recession.
BlackRock added that the main driving force behind
the rise in the unemployment is an uptick in labor supply due to
immigration as opposed to layoffs, which is a key difference compared to
previous recessions.
— Brian Evans
Fed should change communication even if it doesn’t cut rates this week, BlackRock’s Rieder says
The Federal Reserve should come out and signal to markets that it is aware of the issues facing the economy even if it doesn’t do an emergency rate cut, according to Rick Rieder, chief investment officer of global fixed income at BlackRock.
Rieder pointed out that traders are already pricing in aggressive moves from the Federal Reserve and said that the central bank should change its public communication to show that it knows the labor market has weakened and that rate cuts have become increasingly likely.
“Do they have to panic and do inter-meeting? No, but I think ... evolving that communication would be helpful,” Rieder said on “Closing Bell.”
— Jesse Pound
Tech stocks gain in overnight trading after Monday’s sell-off
Technology stocks that sold off during Monday’s session bounced in overnight trading.
also added nearly 1% after dropping about 4.8% during regular trading.
rose more than 2%.
— Samantha Subin
Fed’s Daly sees rate cuts on the way
San Francisco Federal Reserve President Mary Daly indicated Monday that interest rate reductions are coming later this year, though she did not provide specifics.
“Policy adjustments will be necessary in the coming quarter. How much that needs to be done and when it needs to take place, I think that’s going to depend a lot on the incoming information,” the central bank official said during a forum in Hawaii.
Daly noted that she still thinks the economy is growing, though the labor market is weakening and less restrictive policy will be appropriate.
“I see an economy that has momentum, and we want to make sure we keep that,” she said.
—Jeff Cox
bounced in overnight trading after Monday’s sell-off.
Futures tied to the S&P 500 rose 0.45%, while Nasdaq 100 futures
rallied nearly 1%. Futures connected to the Dow Jones Industrial Averagejumped 170 points, or 0.45%.
— Samantha Subin
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