S&P 500, Nasdaq reach record closing highs as focus pivots to earnings

On Tuesday, US stocks surged to record high closings amid stabilizing oil prices and easing US Treasury yields, shifting investor focus towards upcoming third-quarter earnings reports. The S&P 500 and Nasdaq both reached all-time highs, with the Dow nearing its August record despite trailing by 5%. Wealthspire Advisors Senior Vice-President Oliver Pursche attributed the market's buoyancy to reduced energy inflation concerns and lower yields following G7 emergency oil stockpile releases.

Six of the Magnificent Seven AI-linked megacap firms led the gains, while small-cap stocks lagged. The AI sector continued its strength, with the Philadelphia Semiconductor Index surging. Trade data showed a 4.4% rise in August imports of capital goods, while the US trade deficit expanded by 13.7%. The Fed's likelihood of two consecutive rate hikes at this month's meeting dropped to 19.4%, down from 50.9%, as oil prices surged due to the Iran war and eased after the G7 agreement.

Analysts projected robust third-quarter earnings growth, with energy and tech sectors expected to show significant gains.