Stock Market Today: Dow ends up over 400 points, S&P 500 scores biggest 4-day rally of 2024 ahead of July CPI report (2025)

Tuesday's Top Reads

U.S. stocks finished higher on Tuesday, with the S&P 500 and the Nasdaq Composite scoring their biggest four-day rally of 2024 after softer-than-expected producer-price data reinforced bets that the Federal Reserve will commence cutting interest rates in September.

Tuesday’s advance added to the market's comeback from the stock selloff earlier this month, with the three major indexes further erasing their heavy losses from the Aug. 5 rout.

Oil futures snapped a five-day winning streak Tuesday after a feared Iranian retaliatory strike on Israel in response to the July assassination of a top Hamas official in Tehran failed to materialize.

Reuters on Tuesday reported that Iranian officials said only a ceasefire deal in Gaza stemming from possible talks this week would prevent direct retaliation. But U.S. efforts to blunt the Iranian response and limit the risk of a wider regional conflict will prove challenging, said Helima Croft, head of global commodity strategy at RBC Capital Markets, in a note.

"There is still a prevailing view in Washington that Iran does not want a regional war, preferring a grey-zone, proxy conflict," she wrote. Iran's new president also continues to signal a desire to renew nuclear talks in order to secure sanctions relief, Croft said.

Nonetheless, U.S. diplomats face a bigger challenge than they did in April when they helped cool a direct confrontation between Israel and Iran. "With a broader Gaza deal still proving elusive, the prospect of delaying a military response beyond this week seems precarious," Croft said. "Moreover, the White House now has to contend with a coordinated Hezbollah/IRGC (Iranian Republican Guard Corps) strike and hardliners in both groups may be pushing for a more material response than what transpired in April, such as a direct strike on military and intelligence facilities in places like Tel Aviv and Haifa."

U.S. government debt rallied on Tuesday following a mild producer-price report, sending yields to their lowest closing levels in about a week.

Two- and 10-year yields respectively finished at 3.943% and 3.853%, while the 30-year rate fell to 4.166%. Those are the lowest levels since Aug. 5, based on 3 p.m. Eastern time figures from Dow Jones Market Data.

U.S. stock indexes were rallying in the final hour of trading on Tuesday afternoon, with the S&P 500 and the Nasdaq Composite heading for their biggest four-day gains of 2024.

U.S. stocks were higher on Tuesday afternoon, with technology shares leading the charge, after a softer-than-expected producer-price index boosted bets of the Federal Reserve's first interest-rate cut in September.

"[The PPI report] dovetails into what the markets have been looking for — the consumer spending has been slow, but maybe not to recession levels," said James Ragan, director of wealth-management research at D.A. Davidson. "It's going to become a little bit less of an issue for the Fed in terms of worrying about inflation, so they can focus more on the economy and the labor market, and start to lower rates."

U.S. stocks have attempted to claw back their heavy losses in the Aug. 5 rout over the past week, but "investors haven't really seen the growth sectors leading on the recovery" until this week when technology and cyclical sectors started to outperform, Ragan said.

"What we're seeing is just some of the rotation [from defensive stocks] as economic fears have seemed to have abated over the last few days," Ragan told MarketWatch via phone on Tuesday.

Bitcoin rose on Tuesday, as U.S. stocks also climbed after the July producer-price index rose a modest 0.1% in July, lower than the 0.2% rise forecasted by economists.

The largest cryptocurrency by market capitalization was up 2.7% to around $60,599 on Tuesday afternoon, according to Dow Jones Market Data. It is still 18% below its all-time high of $73,798 reached in March.

While the correlation between bitcoin and stocks has fluctuated over time, the crypto has been trading mostly in tandem with stocks during the past few weeks.

Talk about a looming recession in the United States is overblown, Atlanta Fed President Raphael Bostic said Tuesday.

“A recession is not in my outlook. There is still enough momentum in the economy where we can see slowing and not see the labor market deteriorate to a level of considerable concern,” Bostic said during a discussion at the Conference of African American Financial Professionals in Atlanta.

Bostic noted that business leaders have told him that they are not planning “a lot of layoffs.”

“Right now, we’re not hearing a lot of layoffs. We’re not hearing a lot of hiring. Everyone is in a hold mode,” he said, adding that employers think they can meet their demand with their existing workforce. “As long as that continues, I think we will be in a good place.”

The S&P 500 is nearing a key technical level, which if surpassed could send the index up another 125 to 175 points, according to a chart watcher.

The index is currently only about 10 points below the 50% retracement level -- 5,426.77 -- of the decline from the July 16 record close of 5,667.20 to the Aug. 5, three-month closing low of 5,186.33.

"Closes above this threshold would be considered a positive technical signal, with the likelihood of follow-through rally efforts thereafter," wrote Dan Wantrobski, technical strategist at Janney.

But Wantrobski said a close above its 50% retracement level would lead to a rally that tests resistance band within the 5,550 to 5,650 range.

Palantir shares could close Tuesday at levels not seen in three and a half years.

The stock, up 2.8% to a recent $30.20, is on pace to record its highest finish since ending at $31.91 on Feb. 12, 2021, according to Dow Jones Market Data. It's up 76% so far this year.

Palantir shares continue to see momentum stemming from the company's traction with its artificial-intelligence software. The company said strong AI demand helped fuel better-than-expected results earlier this month.

Additionally, Palantir has been striking partnerships in the technology world, including a recent one with Microsoft. Those two companies will bring cloud and AI services to the U.S. defense and intelligence industries.

Chipmakers and consumer-facing companies were contributing to Tuesday's intraday rally in stocks.

The iShares Semiconductor ETF was up 3.8%, buoyed by shares of Nvidia Corp. and Super Micro Computer Inc.

Shares of Nike Inc. and Tesla Inc. also propelled the large-cap benchmark index, up 5.3% and 5.1%, respectively, according to FactSet data.

The S&P 500's consumer-discretionary sector was surging 2.2%, on pace for its best one-day percentage gain since February 22, according to Dow Jones Market Data.