Wall Street witnessed a predominantly positive trading session on Tuesday as investors grew increasingly optimistic about potential interest rate cuts from the Federal Reserve in December. The market sentiment received a significant boost from softer-than-expected retail sales data and mixed wholesale inflation figures, which collectively strengthened the case for monetary policy easing.
Major Indexes Show Mixed Performance
The S&P 500 index registered a modest gain of 0.1% during early trading hours, with an impressive four out of five stocks within the benchmark index closing in positive territory. The Dow Jones Industrial Average demonstrated stronger performance, climbing 288 points which translated to a 0.6% increase. However, the technology-heavy Nasdaq Composite experienced a slight setback, declining 0.3% primarily due to substantial losses in semiconductor stocks.
Sector-Specific Movements and Corporate Earnings
Technology giant Alphabet saw its shares advance by 1.6% as market participants continued to show confidence in the company's recently launched Gemini AI model. Meanwhile, Alibaba's US-listed securities exhibited volatility, swinging between gains and losses following the Chinese technology behemoth's better-than-anticipated quarterly revenue report.
The semiconductor sector faced significant pressure after media reports indicated that Meta Platforms is exploring options to purchase artificial intelligence chips worth billions of dollars from Alphabet. This development triggered substantial declines in major chip manufacturers, with Nvidia plummeting 4.8% and AMD experiencing a more severe drop of 7.4%.
Retail earnings season produced dramatic movements across consumer stocks. Abercrombie & Fitch witnessed an impressive surge of 20.9% after reporting stronger-than-estimated quarterly results and elevating its revenue outlook. Kohl's delivered an even more remarkable performance, rallying 32.4% following the announcement of a surprise profit. Conversely, Dick's Sporting Goods saw its shares decline by 3.2% after posting weaker-than-expected financial results.
Economic Indicators and Market Outlook
Investor sentiment remained firmly supported by growing expectations of a December rate cut, with traders pricing in nearly an 85% probability according to CME Group data. The latest economic indicators presented a mixed picture that neither strongly supported nor contradicted the case for monetary policy easing.
Retail sales figures came in softer than analysts had forecast, while wholesale inflation data showed marginal heating but demonstrated improvement in core components. This combination of economic data kept alive the possibility of Federal Reserve intervention while maintaining market stability.
US Treasury yields experienced a slight easing, with the crucial 10-year yield dipping to 4.01% from 4.04% recorded a day earlier. Asian and European markets also recorded modest gains ahead of the Thanksgiving holiday-shortened trading week in the United States, indicating global optimism about potential monetary policy changes.
