hold or not - Wall Street Rebounds After Selloff, VIX Falls, Dollar Surges Against Yen: What's Driving Markets Tuesday?

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 BTC/USD 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 SPY was trading 2.2% higher to $528.42.

The SPDR Dow Jones Industrial Average DIA rose 1.7% to $393.21.

The tech-heavy Invesco QQQ Trust Series QQQ rose 2.4% to $445.63.

The iShares Russell 2000 ETF IWM rose 1.9% to $206.06.

All 11 sectors of the S&P 500 saw gains, with the Technology Select Sector SPDR Fund XLK leading the way, increasing by 3.1%. The Health Care Select Sector SPDR Fund XLV witnessed the smallest gain, up 1.4%.

Tuesday’s Stock Movers

Nvidia Corp. NVDA rallied over 6%, snapping three straight session of losses.

Meta Platforms Inc. META soared over 5%, marking its best one-day surge in a month.

Stocks reacting to company earnings included:

ADTRAN Holdings, Inc. ADTN, down by nearly 18%,

Caterpillar, Inc. CAT, up 3.8%,

Constellation Energy Corporation CEG, up 6.9%,

CSX Corp. CSX, up 3.7%,

Duke Energy Corporation DUK, up 2.3%,

Expeditors International of Washington, Inc. EXPD, down 4.4%,

Fox Corporation FOXA, up 6.7%,

GLOBALFOUNDRIES Inc. GFS, down 1%,