US equities opened higher on Tuesday, with the Dow Jones Industrial Average adding 155 points (0.3%), while the S&P 500 and Nasdaq Composite gained 0.3% and 0.7%, respectively. The advance was driven by a rebound in semiconductor stocks and a continued slide in Treasury yields, which eased pressure on equity valuations.
Semiconductor rally ahead of Nvidia's report
Chipmakers led the market higher as investors positioned for Nvidia's quarterly earnings, due after Wednesday's close. Advanced Micro Devices and Micron Technology each rose about 3%, Intel gained over 2%, and Nvidia itself climbed more than 1%. The iShares Semiconductor ETF advanced over 2%.
Nvidia's results are widely seen as a barometer for the sustainability of artificial intelligence spending. A strong report could reinforce confidence in the AI trade, while any disappointment might trigger a broader tech selloff. According to options market data, traders are bracing for a potential $280 billion swing in Nvidia's market value.
Treasury yields extend decline
The benchmark 10-year Treasury yield fell to 4.658%, extending Monday's drop. Reports that the Treasury Department may use its $1 trillion General Account to fund bond repurchases have added downward pressure on yields. Lower yields typically support growth-oriented stocks, particularly in the technology sector.
Investors are also awaiting the July personal consumption expenditures price index, due Wednesday, which is the Fed's preferred inflation gauge. Later in the week, Federal Reserve Chairman Kevin Warsh is scheduled to speak at the Jackson Hole symposium on Friday, and his remarks could provide further direction for interest-rate expectations.
UBS advises staying invested
UBS strategists said Tuesday that they expect bond yields to trend lower over the longer term, which should support a broadening of the global equity rally. The firm recommended that investors concerned about elevated yields remain in the market.
"While higher yields are typically a headwind for equities, we believe strong corporate earnings and expectations of further growth should continue to support global equities broadly," UBS analysts wrote. They project S&P 500 earnings per share to grow 25% this year and another 14% in 2026, with European earnings seen rising 15% annually through 2027 and Asia ex-Japan expected to post 72% growth this year.
Oil prices slide on Iran sanctions
Crude oil prices fell sharply Tuesday as the US shifted its approach toward Iran, emphasizing economic sanctions over military action. Brent crude dropped 3.2% to $89.20 a barrel, while West Texas Intermediate fell 3.3% to $82.21. Oil has now declined more than 5% this week following the announcement of additional sanctions targeting Iran and its trading partners.
The White House described the campaign as an "economic D-Day," and Treasury Secretary Scott Bessent called it the "single greatest financial offensive ever." Bessent noted that maximum economic pressure makes a large-scale military conflict less likely in the near term. Lower energy prices could ease inflation concerns and give the Federal Reserve more flexibility in its policy decisions.
As markets digest these developments, the focus remains on Nvidia's earnings and the upcoming inflation data, which could set the tone for risk assets in the coming sessions. For investors, the interplay between AI-driven growth, interest rates, and geopolitical tensions will likely continue to shape market dynamics.
This article is for informational purposes only and does not constitute financial advice.
