Falling yields, slowing economic data and earnings supporting US markets

Stocks rose for another session Tuesday, a decline in yields contributed to the latest gain and new data for further clues into the health of the U.S. economy.

The yield on the benchmark 10-year Treasury note was last down by around 12 basis points at 4.10 per cent. The 2-year Treasury yield was last down around 3 basis points at 4.46 per cent.

Data wise, the S&P CoreLogic Case-Shiller 20-City House Price Index released Tuesday showed home prices fell 1.3 per cent in August, but were still 13.1 per cent higher than a year ago.

The Consumer Confidence Index also fell, showing the view on the economy has soured after two months of the outlook improving. It appears that the market is just starting to get some some indication that economic data moving forward is likely to slow, with the the knock-on effects meaning the aggressive stance of the Fed may ease.

The Dow Jones Industrial Average traded 337 points higher, or 1.1 per cent. The S&P 500 advanced 1.6 per cent, and the Nasdaq Composite popped 2.3 per cent.

Wall Street is now looking towards earnings from key tech companies. Meta Platforms report Wednesday, followed by Amazon and Apple on Thursday. Given their sheer size and market cap, any moves are likely to impact market direction.

On top of that, traders pored over a number of corporate reports. General Motors and Coca-Cola rose 1.4 per cent and 2.5 per cent, respectively, after reporting stronger-than-forecasted earnings. Xerox plummeted 14.5 per cent after earnings per share came in at less than half of what was expected.

So far this season, companies have proven they may be faring better than anticipated. FactSet data shows that, through Tuesday morning, 71 per cent of the companies that reported topped analyst expectations for earnings per share.

Across the sectors, if you did not think the market was about interest rates then look at the real estate sector today.

If Treasury yields have peaked, are peaking or will soon peak, the real estate sectors’ cost of capital declines, the pressure on cap rates eases and their dividend payouts grow more attractive relative to risk-free Treasurys. The Index was certainly beaten up enough to deserve a bounce. Its 31 per cent loss in 2022 is exceeded only by Communication Services’ 35 per cent plunge.

In after hours trading, Alphabet shares dropped 5 per cent after the company reported weaker-than-expected earnings and revenue for the third quarter.

Microsoft shares fell 2 per cent in extended trading on Tuesday after the software maker reported softer cloud revenue than expected in its fiscal first-quarter.

No rebound overnight in China-linked stocks with the likes of Alibaba now back below its issue price.

Currencies

One Australian dollar at 7:25 AM has strengthened compared to the US dollar yesterday, buying 63.95 US cents (Tue: 63.12 US cents),

Commodities

Iron ore futures are pointing to a 0.3 per cent gain.

Gold gained $3.60 or 0.2 per cent to US$1658 an ounce.

Silver added $0.16 or 0.8 per cent to US$19.35 an ounce.

Copper lost $2.65 or 0.8 per cent to US$340.40 a pound.

Oil gained $0.34 or 0.4 per cent to US$84.92 a barrel.

Futures

The SPI futures are pointing to a 0.8 per cent gain.

Figures around the globe