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US stocks jumped on Tuesday, rebounding from Monday’s sharp decline.
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The S&P 500 and Nasdaq 100 rose 1%, driven by investor fears of a possible recession subsiding.
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The CBOE Volatility Index plunged 29%, signaling that investors were buying the dip.
Investors were whiplashed Tuesday as stocks rebounded following Monday’s sharp decline.
The S&P 500 and Nasdaq 100 jumped about 1% in Tuesday’s trading session, as investors grappled with whether the unwind of the yen carry trade was a short-term technical factor.
Concerns of an imminent recession following the trigger of the Sahm Rule last week were dismissed by the inventor of the rule, former Fed official Claudia Sahm, who told Business Insider that the surge throughout the unemployment rate is being driven by an increase in labor supply barely than a decrease in labor demand.
“The US economy continues to be growing. We’re still adding jobs. We’re spending even after inflation,” Sahm said.
Meanwhile, Wall Street strategists said that the current decline throughout the stock market, with the S&P 500 being down about 8% since its July record on Monday, is completely normal.
“While such sharp declines in equity prices are concerning, looking back at historic data on the S&P 500 index reminds us that dips, pullbacks and corrections of 10% or more are a normal and healthy a component of any bull market. On average, stocks experience a pullback of over 5% over thrice per yr and a correction of 10% or more around once per yr — even in positive years,” LPL portfolio strategist George Smith said.
The CBOE Volatility Index, higher known as the VIX, plunged 29% on Tuesday. That decline signals that investors are using the past week’s stock market decline as a likelihood to buy stocks.
The gains on Tuesday were broad-based, with 4 sectors printing gains of about 2% or more. Shares of Nvidia and Meta Platforms surged about 4%, while Eli Lilly and Berkshire Hathaway jumped about 2%.
Goldman Sachs CEO David Solomon swatted down the considered emergency rate of interest cuts from the Federal Reserve, as he doesn’t see an imminent recession on the table.
“I don’t expect that you’re going to see anything before September,” Solomon said of a Fed rate of interest cut. “The economy will chug along and we probably won’t see a recession.”
Here’s where US indexes stood on the 4:00 p.m. closing bell on Tuesday:
Here’s what else happened today:
In commodities, bonds, and crypto:
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West Texas Intermediate crude oil rose 0.33% to $73.18 a barrel. Brent crude, the international benchmark, increased 0.21% to $76.46 a barrel.
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Gold was lower by 0.65% to $2,428.40 per ounce.
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The ten-year Treasury yield rose 9 basis points to 3.89%.
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Bitcoin jumped 4.80% to $56,626.
Read the unique article on Business Insider