Stocks have largely advanced on Tuesday, with all major indices climbing following a mixed performance in the previous session. This upward momentum propelled the Dow Jones Industrial Average and the S&P 500 to new record intraday highs.
Though the major averages have retreated from their peak levels, they continue to maintain a positive stance. The Dow has ascended by 157.71 points, or 0.4%, reaching 41,779.79. The Nasdaq has climbed 130.35 points, or 0.7%, to 17,722.47, and the S&P 500 has risen 27.88 points, or 0.5%, to 5,660.97.
The bullish trend on Wall Street is underscored by optimism regarding the Federal Reserve's impending monetary policy update scheduled for Wednesday. While it is broadly anticipated that the Fed will reduce interest rates, the extent of the rate cut remains a point of debate.
According to CME Group's FedWatch Tool, there is a 61% likelihood of a 50 basis point rate cut and a 39% chance of a 25 basis point cut. Regardless of whether the Fed opts for a 25 or 50 basis point reduction, it is expected to continue easing rates through the end of the year.
Investors also responded positively to a Commerce Department report that unexpectedly indicated a modest increase in U.S. retail sales for August. The Commerce Department revealed that retail sales edged up by 0.1% in August following an upwardly revised surge of 1.1% in July. This uptick defied economists' expectations of a 0.2% decline after the initially reported 1.0% jump in July.
Excluding a minor downturn in sales by motor vehicle and parts dealers, retail sales similarly rose by 0.1% in August after a 0.4% increase in July. Ex-auto sales were anticipated to rise by 0.2%.
"Markets were quick to dismiss the report, anticipating the FOMC has already decided on a 50 basis point cut," noted FHN Financial Economic Analyst Mark Streiber. "We agree that a single retail sales report is unlikely to sway FOMC members, but we still lean towards a 25 basis point cut tomorrow."
### Sector News
Airline stocks are among the day's top performers, with the NYSE Arca Airline Index soaring by 3.1% to its highest intraday level in over a month. An appreciable rise in crude oil prices has also bolstered oil service stocks, with the Philadelphia Oil Service Index jumping by 2.1%.
Significant gains have also been observed in the computer hardware, banking, and brokerage sectors, while the pharmaceutical stocks exhibit some weakness.
### Other Markets
In international markets, stock exchanges across the Asia-Pacific region showed a varied performance on Tuesday. Japan's Nikkei 225 Index dropped by 1.0%, whereas Hong Kong's Hang Seng Index climbed by 1.4%.
Meanwhile, European markets have all advanced—Britain's FTSE 100 Index rose by 0.4%, and both Germany's DAX and France's CAC 40 Index increased by 0.6%.
In the bond market, treasuries have experienced a modest decline. Consequently, the yield on the benchmark ten-year note, which inversely correlates with its price, has increased by 1.7 basis points to 3.638%.
