Stock Market Gains Ground on Strong Earnings as Oil Prices Rise Amid Geopolitical Tensions
US stock markets rallied on Tuesday with the S&P 500 advancing nearly 1%, driven by strong corporate earnings and major industrial firms exceeding expectations. Oil prices climbed above $93 per barrel as Middle East tensions flared, though signs of diplomatic efforts kept volatility contained.
Market Performance
Stocks climbed on Tuesday, supported by chipmakers, as investors looked through the latest developments in the Iran war to focus on corporate earnings updates. The Dow Jones Industrial Average rose 385.38 points, or 0.74%, to 52,224.64. The S&P 500 advanced 0.89% to close at 7,509.20, and the Nasdaq Composite added 1.29% to end at 25,837.21.
All three indexes broke three-day losing streaks. 3M shares jumped more than 7% after the industrial giant's second-quarter earnings came in better than expected. Additionally, General Motors reported a beat on the top and bottom lines for the second quarter, lifting the stock nearly 5%.
Earnings Season Momentum
The reporting period is off to a strong start. Of the roughly 66 S&P 500 names that have reported, nearly 88% have topped bottom-line estimates, per FactSet. Major technology and industrial names have driven sentiment, though Big names set to report later this week include Alphabet, IBM and Tesla.
Oil Markets and Geopolitical Risks
Brent crude futures rose 3% to trade above $93 per barrel, hitting their highest levels as Middle East tensions escalated. BMO Capital Markets said the Treasury market has remained relatively steady despite the latest escalation in the Middle East, as signs of possible mediation tempered the initial jump in oil prices. With little U.S. economic data due this week, however, strategists warned that government bonds could remain vulnerable to abrupt moves in energy prices and developments in the Iran conflict.
Outlook
The degree to which nominal yields can decline will be tempered by the market's ongoing focus on the energy sector and geopolitical tensions, according to BMO strategists. The convergence of strong earnings and energy volatility will likely set the tone for equity markets into the final days of July.