Key Points
- U.S. stocks are rebounding after a sharp sell-off last week.
- The main driver is investors’ hope that the Federal Reserve will cut interest rates in September.
- A weaker-than-expected jobs report is fueling these bets on a rate cut.
- Corporate earnings are in focus, with Palantir reporting strong results. Oil prices are falling after OPEC+ agreed to increase production.
U.S. stocks edged higher Tuesday, continuing a rebound from last week’s sharp sell-off. Investors are shaking off fears about new trade tariffs and a weak jobs report. They are instead focusing on the silver lining: the growing chance of an interest rate cut from the Federal Reserve.
On Tuesday, U.S. stock markets saw strong gains across major indices. The S&P 500 climbed 1.47% to close at 6,329.93, reflecting broad investor confidence. The Nasdaq 100 outperformed with a 1.87% rise, finishing at 23,188.61, driven by strength in technology stocks. Meanwhile, the Dow Jones Industrial Average added 1.34%, ending the day at 44,173.65, as optimism around earnings and economic data boosted sentiment.
The market had a rough end to last week after President Trump announced a new wave of tariffs, and employment numbers came in softer than expected. But that “bad news” on the economy is now being seen as “good news” for stocks.
Investors are betting that the weak data will push the Fed to cut interest rates next month to help support the economy. Markets are now pricing in a roughly 90% chance of a September rate cut, up from just 63% a week ago.
Meanwhile, the corporate earnings season continues to be a major focus. So far, results have been relatively solid. Palantir shares soared in premarket trading after the defense tech company reported its quarterly revenue topped $1 billion for the first time.
Investors are now looking ahead to results from major companies like AMD, Rivian, and Caterpillar later today, with Disney and Uber reporting on Wednesday.
In the energy market, oil prices continued to slide. Crude fell after the OPEC+ group of oil-producing nations agreed to increase production by another 547,000 barrels per day. The move to pump more oil, combined with an uncertain demand outlook, is putting downward pressure on prices.
