The Dow Jones Industrial Average climbed around 650 points Tuesday as earnings beats and falling oil prices lifted blue-chip stocks. Memory-chip names pulled the other way, leaving the Nasdaq-100 touching correction territory a day before the Federal Reserve's rate decision.
The Dow Jones Industrial Average powered up 1.3%, or around 650 points in afternoon trade Tuesday, carried by quarterly results and a slide in crude. The S&P 500 boosted its gain to 0.5% but remained below its 50-day moving average, while the Nasdaq composite inched up 0.2% after morning losses.
Earnings lift the Dow, chips drag the Nasdaq
Coca-Cola shares jumped nearly 4% after the company beat Wall Street's estimates and raised its full-year forecast. Sherwin-Williams rose 8% on better-than-expected second-quarter results to lead the Dow higher, CNBC reported. Boeing rallied more than 1% despite a bigger-than-expected quarterly loss tied to its long-delayed Air Force One program.
But the memory and storage names moved hard the other way. Sandisk cratered around 13% and Micron Technology tumbled 10%, with competition concerns among the sources of pressure on the space. The Nasdaq-100 pared its loss to 0.7% after an intraday low of 27,452.95, nearly 11% under its record high of 30,762.20, touching into correction territory.
Cheaper crude gives stocks cover
Stocks found upside support as oil extended its losses, with reports saying Oman is in discussions with other Gulf nations about how to manage the Strait of Hormuz while U.S.-Iran talks continue. Brent crude fell more than 5% to $81.75, and West Texas Intermediate futures lost more than 4% to $79.10 per barrel.
Bonds moved in the same direction. The 10-year Treasury yield dropped 4 basis points to just under 4.6%, and small caps turned positive, with the Russell 2000 adding 0.2%.
Fed decision lands Wednesday
The Federal Open Market Committee started its two-day meeting on Tuesday, with the policy decision due Wednesday afternoon. The CME FedWatch tool shows a roughly 31% chance of a quarter-point rate hike Wednesday.
Rick Gardner, chief investment officer at RGA Investments, said in an emailed note: "We think any interest rate hike this year is unlikely", in part because bond yields have already risen to the upper end of their trading range. Big Tech earnings this week may also show whether the money companies are spending on artificial intelligence is generating a return, he said.
The day's moves fit a broader rotation CNBC described, in which old-economy sectors gain while high-flying technology names take a hit. The Technology Select Sector SPDR Fund hit its lowest level since May 7, while health care and financials sector ETFs surged to record highs, led by insurance stocks.
Sources: Investor's Business Daily, CNBC
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