U.S. stocked moved higher Tuesday, thanks to an extended pullback in Treasury bond yield and a modestly softer dollar, as investors look to a crucial day of earnings reports on Wall Street that includes updates from mega-cap tech giants Microsoft (MSFT) -) and Google (GOOGL) -).
Treasury markets have been dictating action on Wall Street for a number of weeks now, with notable moves in benchmark yields tied to bets on near-term Fed rate hikes, a resilient economy, quicker inflation and concerns over record U.S. budget deficits.
The MOVE index, in fact, which tracks Treasury bond options and is a key market proxy for overall risk, is holding near the highest levels in six months as 10-year notes, which topped 5% for the first time since 2007 earlier this week, eased to 4.838% in late New York trading.
Benchmark 2-year notes, meanwhile, were last seen trading at 5.103%, down around 4 basis points from Monday levels but up firmly from earlier lows following a disappointing auction of $51 billion in new notes earlier in the session.
Curiously, Treasury yields remained muted following a faster-than-expected reading for October economic activity, based on S&P Global's flash Composite Purchasing Managers Index (PMI) that came in at 51.0, a full point higher than the 50 point mark that separates growth from contraction.
Stocks have largely been captive to the moves in Treasury yields, although that coupling may have failed yesterday as the sharp pullback in 10-year notes failed to prevent the S&P 500 from falling for a fifth consecutive session and closing at its lowest level since late May.
Today's session may be more equity-focused, however, with earnings from General Electric (GE) -), General Motors (GM) -), 3M (MMM) -) and Verizon (VZ) -) before the opening bell, and Visa following tech giants Google and Microsoft after the bell.
Collective third quarter S&P 500 earnings are likely to grow 1.1% from last year to a share-weighted $463.3 billion, powered by gains in consumer discretionary and communications services stocks, according to Refinitiv data.
Global markets are still risk-focused, however, even as Israel holds off its planned ground assault on Gaza as it negotiates the fate of 210 hostages taken by Hamas during its surprise attack on October 7.
Oil prices inched back above the $90 market in overnight trading as a result, although Brent crude contracts for December delivery fe;; $1.84 to $87.96 per barrel in the New York session and WTI futures for the same month were down $2.08 to $83.43 per barrel.
On Wall Street, the Treasury yield pullback is giving stocks a modest boost, with the S&P 500 rising 32 points, or 0.77%, in late afternoon trading while the Dow Jones Industrial Average gained 255 points.
The tech-focused Nasdaq, meanwhile, was up 109 points, or 0.84%, thanks in part to early gains for Tesla (TSLA) -), Nvidia (NVDA) -) and Advanced Micro Devices (AMD) -).
In overseas markets, Europe's Stoxx 600 was up 0.52% by the close of Frankfurt trading in a busy earnings session Tuesday following PMI data showing economic activity slumped to its slowest pace in three years this month, adding to concerns the bloc is likely headed into recession.
Overnight in Asia, the region-wide MSCI ex-Japan index edged 0.31% higher from the November lows it touched earlier this week, with Japan's Nikkei 225 rising 0.2% on the session as the yen held near the 1.50 mark against the U.S. dollar that could trigger intervention from the Bank of Japan.
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