Wall Street ends higher as tech rebounds before Nvidia results

On Tuesday, Wall Street's major indexes rose, as technology stocks recovered from a recent decline prior to Nvidia's earnings announcement, while investors experienced some relief from falling oil prices and bond yields. The positive sentiment may help alleviate concerns stemming from a recent downturn in the bond market, which increased yields and pressured equities, as well as set the tone for September, typically a less favorable month for stocks.

Longer-dated Treasury yields declined due to a drop in oil prices and the ongoing deliberations over the implications of Treasury Secretary Scott Bessent's decision to expand Treasury buybacks. Joe Quinlan, a market strategist, highlighted the ongoing fluctuations between bond market dynamics, geopolitical factors, and oil prices.

He expressed a constructive outlook for the US economy over the next 12 to 18 months, supporting positive market sentiment.

Nvidia's upcoming earnings release on Wednesday will be a key test for the earnings-driven rally. Any indications of deceleration in growth could reignite worries about inflated valuations and the sustainability of the AI boom. Mark Malek, a chief investment officer, pointed out the pressure on cyclical spending and methods used by hyperscalers to fund their AI initiatives.

Investor caution towards such spending methods has grown, as the market grapples with the transition from trade catalyst to prerequisite. The Dow Jones Industrial Average climbed 160.24 points, or 0.30%, to 53,577.40, the S&P 500 increased by 24.38 points, or 0.32%, to 7,677.24, and the Nasdaq Composite added 171.11 points, or 0.66%, to 26,151.30.

Among tech stocks, Nvidia increased by 2.2%, Meta rose nearly 2%, while chipmaker Micron gained 2.5%. The broader semiconductor index demonstrated a 1.4% gain after a 2.7% drop on Monday. Advanced Micro Devices saw a 4.9% boost following an upgrade from Raymond James. Shares in biotech company Moderna surged 14% after Barclays upgraded its target price, following the release of late-stage trial results for their jointly developed skin cancer vaccine with Merck.

Dick's Sporting Goods experienced a steep 30.7% decline after the retailer reduced its annual profit forecast. Sportswear giant Nike also experienced a dip. Target shares fell 3.8% after the company apologized for and withdrew a Halloween costume deemed offensive due to blackface references, raising concerns about brand missteps just as its turnaround efforts were gaining momentum.

The upcoming Personal Consumption Expenditures report on Wednesday could offer further insights into price pressures following a moderate consumer inflation report, which has dampened expectations of an imminent interest rate hike by the Federal Reserve. On Tuesday, a survey revealed that U.S. consumer confidence dropped in August to its lowest level in seven months.

Despite this, money market participants anticipate one 25-basis-point rate increase by year-end, according to LSEG data. Investors will closely monitor Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole, Wyoming, gathering on Friday for insights into the central bank's stance on monetary policy.