Stocks extended their winning streak on Tuesday, marking the seventh consecutive session of gains, buoyed by growing optimism around the Federal Reserve potentially concluding its tightening efforts this year.
The tech-focused Nasdaq Composite (^IXIC) sustained its own winning momentum, climbing by 0.9%, while the S&P 500 (^GSPC) inched up by almost 0.3%. The Dow Jones Industrial Average (^DJI) also saw a modest rise of nearly 0.2% or around 60 points.
Amidst recent indications of a sluggish US economy, investors perceived a possible shift in the Fed’s stance on rate hikes. However, despite the market’s anticipation of a pause, central bankers have indicated the possibility of further rate increases if necessary.
Despite the market’s optimistic turn, there remain cautious voices, such as Minneapolis Fed President Neel Kashkari, who reiterated on both Monday and Tuesday that the central bank may still have more work to do in managing inflation. Kashkari was among several Fed members expressing prudence on Tuesday. Federal Reserve Chair Jerome Powell is expected to deliver a speech later in the week.
Michael Hewson, chief market analyst at CMC Markets UK, noted that there was initial enthusiasm at the end of the previous week, predicated on the belief that the Fed’s tightening was over, and the US economy was heading for a soft landing. He cautioned that there was still a possibility of the Fed resuming its tightening measures.
Concerns surrounding the Federal Reserve’s outlook overshadowed the oil market, leading to a decline in WTI crude prices, which fell below $80 a barrel for the first time in over two months, despite the potential for supply cuts from Saudi Arabia and Russia.
West Texas Intermediate crude futures (CL=F) and Brent crude futures (BZ=F) both dropped by 4%, settling at $77.48 and $81.76 a barrel, respectively.
Oil prices were further impacted by trade data revealing a surprising acceleration in the decline of China’s exports in October, suggesting weakened demand abroad, although its imports saw an increase. Nevertheless, the International Monetary Fund (IMF) raised its GDP growth forecasts for China for this year and the next, providing a positive outlook for the world’s second-largest economy.
In corporate developments, WeWork (WE) filed for bankruptcy on Monday after grappling with expensive leases, causing its shares to plummet by approximately 98% this year.
Furthermore, the earnings season continued with reports from Uber (UBER) and Rivian (RIVN) highlighting Tuesday’s schedule, leading up to the eagerly anticipated release of Disney‘s (DIS) results scheduled for Wednesday.
