US stocks closed at record highs on Tuesday as easing oil prices and lower Treasury yields gave investors some relief from inflation concerns, shifting attention towards the upcoming third-quarter earnings season.
The S&P 500 gained 45 points, or 0.58%, to 7,818.95 while the Nasdaq Composite rose 122.48 points, or 0.45%, to 27,599.79. The Dow Jones Industrial Average advanced 253.14 points, or 0.49%, to 51,521.04.
Six of the Magnificent Seven technology stocks gained, while the Philadelphia SE Semiconductor Index also advanced as investors continued to back the artificial intelligence trade.
“When oil prices stabilize or move lower, that causes yields to move down because there’s less anxiety about energy-driven inflation, which in turn is helping lift stocks higher,” said Oliver Pursche, senior vice president at Wealthspire Advisors in New York.
The easing in oil-related concerns followed an agreement by G7 countries to release emergency diesel and crude stockpiles, helping stabilise Brent and US West Texas Intermediate futures after prices surged amid the Iran war.
Markets have also scaled back expectations of another Federal Reserve rate hike this month. CME’s FedWatch tool showed the probability had fallen to 19.4%, from 50.9% a week earlier.
“We don’t expect (the Fed) to do anything at the next meeting,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. “But I think they’re in a gradual hiking cycle.”
The focus now turns to third-quarter results, with major financial firms due to report next Tuesday. Analysts expect S&P 500 earnings to rise 30.6% year-on-year, led by projected growth of 114.7% in energy earnings and 66.5% in technology, according to LSEG.
Among individual stocks, Marvell Technology rose 5.8% after raising its 2028 revenue forecast on strong demand for data centre chips, while AMD gained 2.8% after CEO Lisa Su said the company plans to substantially increase chip supply in 2027 to meet AI demand.
Constellation Energy jumped 12.3% after Alphabet agreed to a 3,590-megawatt power deal with the company. Option Care Health surged 32.7% after McKesson and Clayton Dubilier & Rice agreed to acquire the infusion therapy provider in a deal worth about US$5.8 billion including debt.
The gains came despite data showing the US trade deficit widened 13.7% in August as imports reached a record high, pointing to strong domestic demand that could add to inflationary pressures.
All but one of the S&P 500’s 11 major sectors gained, led by utilities.
Trading volume on US exchanges stood at 16.50 billion shares, below the 17.51 billion average over the past 20 trading days.
Reuters
