U.S. stock markets rose on Tuesday, showing signs of recovery from Monday’s decline, despite continuing concerns about an economic slowdown.
Recession Fears Lead to Heavy Losses
Concerns about a significant slowdown in economic growth, following a string of poor data related to the purchasing managers’ index and the labor market, caused the DJIA, S&P 500, and Nasdaq to lose nearly 5%, 6%, and 8% respectively in three days, marking their worst three-day performance in more than two years.
Weak economic data fueled fears that the Fed would keep interest rates higher for longer and that any cut by the central bank right now would not be enough for the economy to achieve a soft landing.
That said, markets increased their estimates for a 50 basis point cut in September and were looking at at least 100 basis points in rate cuts this year, according to CME FedWatch.
2Q Earnings Follow
Caterpillar (CAT) stocks rose 1% after the industry giant unveiled a slight quarterly profit increase, supported by resilient demand for its larger excavators and other construction equipment amid rising U.S. infrastructure spending.
Shares of Uber Technologies (UBER) rose more than 5% as the ride-hailing company beat estimates for both second-quarter revenue and core earnings on continued demand for its ride-sharing and food delivery services.
Super Micro Computer (SMCI) will also release its results after the bell, and is set to provide more clues about demand from the artificial intelligence industry.
Additionally, Palantir Technologies (PLTR) rose nearly 11% after the software services provider raised its annual revenue and profit forecast for the second time in 2024, while Lucid Group (LCID) rebounded more than 9% due to better-than-estimated second-quarter revenue and after the electric vehicle maker unveiled that its largest shareholder, Saudi Arabia’s Public Investment Fund (PIF), will invest about $1.5 billion in cash.
Media giants such as Walt Disney (DIS) and Warner Bros. Discovery (WBD) will release their results on Wednesday.
Oil Prices Continue to Fall
Crude oil prices declined on Tuesday, continuing to fall in a volatile market after hitting eight-month lows on concerns about global demand.
Concerns about a possible escalation of the war between Israel and Hamas, especially after Iran vowed to retaliate for the assassination of a Hamas leader in Tehran, have supported oil markets.
However, confidence remains fragile due to fears that slowing economic growth will dampen demand, especially after disappointing U.S. labor market data raised concerns about a potential U.S. recession.
