Stocks Rally On Weaker PMI Data, Tech Earnings Optimism, Dollar Falls: What's Driving Markets Tuesday?

Stocks surged across the board on Tuesday, gaining momentum after Monday’s rebound as unexpectedly weak economic data bolstered hopes for a potential Federal Reserve rate cut by the end of the summer.

What Happened: The S&P Global’s Purchasing Managers’ Index (PMI) for April indicated a significant deceleration in private sector growth—the slowest in four months—also highlighting reduced inflationary pressures from wages and services.

Market-implied probabilities for a rate cut by the Fed as early as September jumped to 72%, up from 67% on Monday, according to CME Group’s FedWatch Tool.

Meanwhile, corporate earnings have generally exceeded expectations, with investors now eagerly anticipating results from Visa Inc. V and Tesla Inc. TSLA, slated for release after market close.

By midday trading in New York, the S&P 500 climbed 1.2%, setting the stage for its best performance in over a month. The Nasdaq 100 outperformed the broader market, up 1.5%, while the Dow Jones Industrial Average saw a more modest increase of 0.6%.

The iShares Russell 2000 ETF IWM outperformed its large-cap counterparts, jumping 1.7% and marking its most significant gain since late March.

The dollar declined by 0.4%, and Treasury yields slightly fell. In the commodities market, gold remained steady following its sharpest drop in years on Monday, while oil prices inched 1% higher. Bitcoin edged down slightly by 0.3% to $66,640.

Tuesday’s Performance In Major US Indices, ETFs

The SPDR S&P 500 ETF Trust SPY rose 1.2% to $505.50, the SPDR Dow Jones Industrial Average DIA rose 0.6% to $384.94 and the tech-heavy Invesco QQQ Trust QQQ rallied 1.5% to $425.11, according to Benzinga Pro data. 

Sector-wise, the Communication Services Select Sector SPDR Fund XLC outperformed, up 1.8%. The Materials Select Sector SPDR Fund XLB was the major laggard, down 0.5%.

Tuesday’s Stock Movers

• Spotify Technology S.A. SPOT saw its shares surge 17% following a robust earnings beat, setting the stock on course for its best single-day performance since its 2018 IPO.
• Other companies reacting to recent earnings were Globe Life Inc. GL, up 13%, GE Aerospace GE,up 7.3%, Danaher Corp. DHR, up 7.3%, General Motors Corp. GM, up 5%, Novartis AG NVS, up nearly 3%, PepsiCo. PEP, down 2.2%, United Parcel Service, Inc. UPS, up 2%, Xerox Holdings Corporation XRX, down 11%, MSCI Inc. MSCI, down 14%, LKQ Corp. LKQ, down 14%, Halliburton Company HAL, flat, and Lockheed Martin Corporation LMT, up 0.5%,
• Notable names reporting after the close other than Tesla Inc. and Visa, Inc. are Texas Instruments, Inc. TXN, Steel Dynamics, Inc. STLD, Seagate Technology Holdings plc STX, Mattel, Inc. MAT, Chubb Limited CB, Canadian National Railway Company CNI and Baker Hughes Company BKR.

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