EchoStar shares surged following AT&T's announcement of a $23 billion license acquisition. The dollar is under pressure due to expectations of a rate cut. AMD shares gained after an optimistic outlook from Truist Securities. Eli Lilly shares advanced thanks to a drug that reduces weight in diabetes patients by 10.5%. S&P 500 +0.41%, Nasdaq +0.44%, Dow +0.30%.
S&P 500 rises amid corporate headlines and political turmoil
On Tuesday, the S&P 500 closed higher. The market found support from Nvidia and Eli Lilly shares, even as US President Donald Trump's decision to remove the Federal Reserve chair sparked concerns over regulator independence.
Nvidia in focus
Nvidia shares rose by 1.1% in anticipation of the quarterly report due Wednesday evening. Investors are keen to learn how the largest chipmaker by capitalization is handling pressure from both Washington and Beijing amid ongoing trade tensions. The reporting period's results may set the tone for the entire artificial intelligence stock segment or, conversely, cool recent enthusiasm on Wall Street.
Fed resignation and market reaction
On Monday evening, Trump announced the dismissal of Fed Chair Liza Cook, citing alleged violations in obtaining mortgage loans. This decision intensified debate over the central bank's political independence. Against this backdrop, S&P 500 futures briefly dipped, but the market quickly rebounded as investors shifted focus to the anticipated key rate cut in September.
Rates and analyst forecasts
Despite persistent inflationary pressures, traders expect the Fed to ease policy by 25 basis points by fall. Optimism is fueled by comments from regulator chief Jerome Powell, weak labor market statistics, and staff changes within the Fed. Morgan Stanley also expects a rate cut at the September meeting, although final investor sentiment will depend on upcoming inflation and employment data.
Pharmaceutical industry pushes market higher
Eli Lilly shares roseby nearly 6% after the company reported impressive clinical trial results. The experimental diabetes treatment demonstrated the ability to reduce patient weight by an average of 10.5%, fueling strong investor optimism.
Stock indices close higher
The US equity market ended Tuesday on a positive note. Major indices gained in value, although record highs were not reached.
Trading performance:
- the S&P 500 increased by 0.41% to 6,465.94 points, just short of the August 14 high;
- the Nasdaq added 0.44% to reach 21,544.27 points;
- the Dow Jones Industrial Average climbed by 0.30% to 45,418.07 points.
Sector leaders
Out of the 11 main S&P 500 sector indices, seven posted gains. The industrial sector led with a 1.03% increase. The financial sector was up 0.76%, also providing notable support to the market.
Corporate drivers
Shares of Advanced Micro Devices added 2% after Truist Securities upgraded the company's rating from "hold" to "buy." EchoStar performed even more spectacularly, surging by 70% to a historic high. The rally was triggered by AT&T's announcement of an agreement to acquire part of the company's wireless spectrum licenses for nearly $23 billion.
Asia and currency market
Dynamics on Asian exchanges are mixed on Wednesday as investors await Nvidia's report. Results from the largest artificial intelligence player have the potential to shape short-term sentiment on risk assets. In the currency market, the US dollar is fluctuating as traders remain concerned about pressures on Federal Reserve independence.
European markets open higher amid political instability in France
European equity futures kicked off the day with gains, though investors remained cautious. The reason is Prime Minister Francois Bayrou's failed attempt to secure support for an unpopular government debt-reduction plan.
France and political risks
The situation unfolds against the backdrop of a recent crisis: at the end of 2024, France lost its previous Prime Minister Michel Barnier, who was dismissed following a parliamentary vote of no confidence over the budget. His tenure lasted only three months.
Bonds and yields
The yield on two-year short-term bonds, which are sensitive to rate expectations, initially fell to 3.654%, their lowest level since May, but later rose by 1.8 basis points to 3.661%. The yield on long-term 30-year bonds also rose, up 1.4 basis points to 4.922%.
Asian exchanges and China factor
The MSCI index tracking Asia-Pacific equities excluding Japan was virtually unchanged. Meanwhile, Chinese stock markets extended gains, with the blue-chip CSI300 index hitting a three-year high amid growing interest in the technology sector.
Gold and commodity markets
Gold prices declined by 0.47% after the precious metal had reached a two-week peak in the previous session. After falling the previous day, oil prices stabilized as markets assessed the impact of new US tariffs on India, one of the world's largest commodity importers.
Oil: Brent and WTI
Brent futures added 5 cents to reach $67.27 per barrel. West Texas Intermediate contracts increased by 3 cents to $63.28 per barrel.
