Stocks opened higher Tuesday, bouncing back from a loss a day earlier that saw the tech-heavy Nasdaq Composite fall into correction territory on fears of heightened regulatory scrutiny, with support tied to renewed hopes for U.S.-China trade talks.
Investors were also looking ahead to a speech by Federal Reserve Chairman Jerome Powell for any signals the central bank is leaning toward cutting interest rates. Recent moves in financial markets reflect growing expectations for easier monetary policy.
How are stock benchmarks faring?
The Dow Jones Industrial Average DJIA, +1.25% rose 233.21 points, or 0.9%, to 25,052.99, while the S&P 500 SPX, +1.07% was up 23.18 points, or 0.8%, to 2,767.63. The Nasdaq Composite COMP, +1.17% gained 65.86 points, or 0.9%, to 7,398.88.
On Monday, the Nasdaq dropped 120.13 points, or 1.6%, to 7,333.02 to finish in correction territory, defined as an index closing at least 10% below its recent peak, which for the Nasdaq was a record finish of 8,164 hit on May 3.
The S&P 500 index shed 7.61 points, or 0.3%, to 2,744.45 while the Dow made a comeback to erase a more than 100-point deficit to edge up 4.74 points to 24,819.78.
What’s driving the market?
The Nasdaq’s 10% decline from its May 3 record, which culminated Monday, meets Wall Street’s definition for a correction, prompted primarily by heightened threats that U.S. regulators may reduce the size of tech and social-media companies like Facebook Inc. FB, -1.07% and Google-parent Alphabet Inc. GOOG, +0.52% GOOGL, +0.55% for potential violations of antitrust regulations.
Increased scrutiny directed at some of the key members of the so-called FANG stocks, which also include Netflix Inc. NFLX, +3.02% and Amazon.com Inc. AMZN, +0.86% comes amid growing worries about slowing economic inside and outside the U.S.
Reflecting those fears are government bond yields, which have been holding their lowest yields since 2017. The yield on 10-year U.S. Treasury note TMUBMUSD10Y, +2.33% was around 2.10% from 2.085% on Monday. The decline in bond yields, which move in the opposite direction as prices, also signal mounting Wall Street bets that the Federal Reserve will reduce rates in coming weeks.
Market participants may gather more clarity on the rate-setting Federal Open Market Committee’s thinking later Tuesday after Fed Chairman Jerome Powell speaks at 9:55 a.m. Eastern Time. Those comments come after St. Louis Fed President James Bullard on Monday said rate cuts “may be warranted soon,” amid U.S.’s international trade disputes.
Analysts also pointed to remarks by China’s Commerce Ministry, which said “differences and frictions” should be resolved through talks, according to news reports.
Read: Feds target 4 of the biggest tech companies in U.S., and their stocks got slammed
Read: U.S. manufacturers expand in May at slowest pace in 2 1/2 years, ISM finds
Which stocks are in focus?
Shares of Uber Technologies Inc. UBER, -0.46% could be in focus, as Tuesday marks the end of a “quiet period” during which investment banks that underwrote the ride-hailing company’s May 10 initial public offering were unable to comment on the company. Shares were up 2.7%.
Analysts from SunTrust, BTIG and William Blair initiated coverage of the stock with buy or outperform recommendations, and the stock rose 1.1% before the start of trade.
Tiffany & Co. TIF, +3.87% stock shook off premarket weakness to rise 4%, after the luxury jewelry retailer reported a 5% decline in first-quarter same sales growth.
Shares of Ventas Inc. VTR, -2.68% fell 2.4%, after senior housing and health-care properties company said Monday that it was issuing 11 million new shares to the public at $62.75 per share. The stock closed at $64.15 Monday.
Shares of CVS Health Corp. CVS, +3.73% was in focus after the company said it expects its merger with health insurer Aetna will result in more than $300 million in synergies in 2019 and $800 million in 2020. The company said it would outline a series of measures at an investor day later Tuesday aimed at accelerating growth. The stock rose 3.1%.
What are strategists saying?
“Bullard’s dovish comments lend support to the currently aggressive message from money market forwards that a rate cut at the 31 July [Federal Open Market Committee]-meeting is a close call, with a likelihood of 59.1%,” wrote analysts at UniCredit in a Tuesday research note.
How are other markets trading?
Stocks in Asia closed mostly lower Monday, with Japan’s Nikkei 225 NIK, -0.01% ending the day flat, while China’s Shanghai Composite Index SHCOMP, -0.96% fell 1% and Hong Kong’s Hang Seng Index HSI, -0.49% lost 0.5%. Stocks in Europe were on the rise, with the Stoxx Europe 600 SXXP, +0.35% up 0.6%.
In commodities markets, the price of oil CLN19, -0.96% was in retreat, while gold prices GCN19, +0.11% inched up. The U.S. dollar DXY, +0.08% meanwhile, fell slightly against a basket of its peers.
https://www.marketwatch.com/story/stock-market-set-to-stage-rebound-after-nasdaq-enters-correction-phase-2019-06-04
2019-06-04 13:46:00Z
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