U.S. stock markets saw a strong recovery on Tuesday, with both the S&P 500 and the Nasdaq 100 climbing over 2%, nearly offsetting Monday’s losses. Investors took advantage of recent volatility to buy the dip, showing continued confidence in the U.S. economy’s ability to avoid a recession.

Gains were observed in both small-cap and blue-chip stocks, reflecting broad improvement in market sentiment.

The CBOE Volatility Index (VIX), often referred to as the market’s fear gauge, decreased by almost 40% on Tuesday after spiking 65% on Monday.

According to the FedWatch Tool, the likelihood of a 50-basis-point interest rate cut decreased to 90% Monday to 64% Tuesday.

As traders reassess Fed rate cuts, Treasury yields increased during the day, with the 10-year yield rising by 11 basis points to 3.9% and the two-year yield climbing 9 basis points to 4.01%.

The rebound of the U.S. dollar was supported by rising yields and diminished expectations of a larger Federal Reserve rate cut in September. The dollar increased by 0.8% against the low-yielding Japanese yen, breaking a streak of five consecutive days of losses.

In terms of macroeconomic data, the day was relatively quiet, with only June’s trade figures making news. The U.S. trade deficit narrowed to $73.1 billion in June 2024 from a revised 20-month high of $75 billion in May, slightly above market forecasts of a $72.5-billion gap. Exports increased by 1.5% to $265.9 billion, the second-highest on record, while imports grew by a more modest 0.6% to $339 billion.

Gold and oil prices both decreased by 0.7% and 0.8%, respectively, marking their fourth consecutive session of declines.

Bitcoin (CRYPTO: BTC) rebounded by 4.9% after experiencing a 7% drop on Monday.

Tuesday’s Performance In Major US Indices, ETFs

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust (NYSE:SPY) was trading 2.2% higher to $528.42.
• The SPDR Dow Jones Industrial Average (NYSE:DIA) rose 1.7% to $393.21.
• The tech-heavy Invesco QQQ Trust Series (NASDAQ:QQQ) rose 2.4% to $445.63.
• The iShares Russell 2000 ETF (NYSE:IWM) rose 1.9% to $206.06.
• All 11 sectors of the S&P 500 saw gains, with the Technology Select Sector SPDR Fund (NYSE:XLK) leading the way, increasing by 3.1%. The Health Care Select Sector SPDR Fund (NYSE:XLV) witnessed the smallest gain, up 1.4%.

Tuesday’s Stock Movers

• Nvidia Corp. (NASDAQ:NVDA) rallied over 6%, snapping three straight session of losses.
• Meta Platforms Inc. (NASDAQ:META) soared over 5%, marking its best one-day surge in a month.

Stocks reacting to company earnings included:

• ADTRAN Holdings, Inc. (NASDAQ:ADTN), down by nearly 18%,
• Caterpillar, Inc. (NYSE:CAT), up 3.8%,
• Constellation Energy Corporation (NASDAQ:CEG), up 6.9%,
• CSX Corp. (NASDAQ:CSX), up 3.7%,
• Duke Energy Corporation (NYSE:DUK), up 2.3%,
• Expeditors International of Washington, Inc. (NYSE:EXPD), down 4.4%,
• Fox Corporation (NASDAQ:FOXA), up 6.7%,
• GLOBALFOUNDRIES Inc. (NASDAQ:GFS), down 1%,
• Hyatt Hotels Corporation (NYSE:H), down 0.7%,
• Lucid Group, Inc. (NASDAQ:LCID) up 9%,
• Molson Coors Beverage Company (NYSE:TAP), up 6.8%,
• Palantir Technologies Inc. (NYSE:PLTR) up 12.3%,
• Uber Technologies, Inc. (NYSE:UBER), up 11%
• Teradata Corporation (NYSE:TDC) down about 14%,
• WK Kellogg Co (NYSE:KLG) down 6.7%,
• Yum! Brands, Inc. (NYSE:YUM) up 3.7%,
• ZoomInfo Technologies Inc. (NASDAQ:ZI), down nearly 19%.

Companies reporting after the close are Airbnb, Inc. (NASDAQ:ABNB), Coupang, Inc. (NYSE:CPNG), Devon Energy Corporation (NYSE:DVN), Amgen, Inc. (NASDAQ:AMGN), Cirrus Logic, Inc. (NASDAQ:CRUS), Exelixis, Inc. (NASDAQ:EXEL), Fortinet, Inc. (NASDAQ:FTNT), GoPro, Inc. (NASDAQ:GPRO), Illumina, Inc. (NASDAQ:ILMN), Jack in the Box Inc. (NASDAQ:JACK), IAC Inc. (NASDAQ:IAC), Tripadvisor, Inc. (NASDAQ:TRIP), Reddit, Inc. (NYSE:RDDT), Rivian Automotive, Inc. (NASDAQ:RIVN), Sunrun Inc. (NASDAQ:RUN), Wynn Resorts, Limited (NASDAQ:WYNN) and Super Micro Computer, Inc. (NASDAQ:SMCI).

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