On Tuesday, the Dow gained almost 200 points as investors anticipated a more comprehensive rebound given that bond rates were at multi- month highs and Middle East tensions were increasing.Â
Weakening The Key Revenue Source
The Dow Jones Industrial Average (^DJI) rose roughly 0.6% after losing six straight sessions. Amidst a 0.1% decline in the tech-heavy Nasdaq Composite (^IXIC), the S&P 500 (^GSPC) remained flat.
The tone shifts to one of optimism as earnings reports start to filter in ahead of the bell. Even though United Health (UNH) announced that it expected to receive a $1.6 billion payout from a February cyberattack, the healthcare group’s shares increased by more than 5% after it exceeded quarterly earnings projections.
Investors were also processing additional significant bank reports: Morgan Stanley (MS) stock increased as results exceeded forecasts, while Bank of America (BAC) revealed that first-quarter profit fell 18% year over year due to a weakening of a key revenue source.
Lowering Interest Rates
Johnson & Johnson (JNJ) revealed a sales shortfall, while BNY Mellon (BK) announced a profit beat.
The docket also includes results from other airlines, including United Airlines (UAL). Large losses were recorded by stocks on Monday as positive retail sales data increased predictions that interest rates would remain higher for a longer period of time this year.
The current consensus is that the Federal Reserve should wait to lower interest rates until September due to the robust economy, but other people think politics may force them to move sooner.
Following Monday’s 10-year Treasury yield (\TNX) reaching 2024 highs, bond rates increased further. Early on Tuesday, the yield was up 4 basis points, or roughly 4.66%.
As friends call for military moderation, investors are waiting to see how Israel would react to Iran’s attack over the weekend, which has escalated tensions in the Middle East.
