Small Caps, Bitcoin Rally As Traders Await Fed Rate Cut; Treasury Yields, US Dollar Tick Up On Strong Retail Sales: What's Driving Markets Tuesday?

Author: Piero Cingari | September 17, 2024 01:37pm

Wall Street experienced a slightly positive session Tuesday, supported by investor optimism as the Federal Open Market Committee (FOMC) kicked off its two-day meeting, expected to deliver the first interest rate cut in over four years on Wednesday.

The session’s notable performers were small caps, with the Russell 2000 index surging about 1.3%, targeting its highest close since early August and outperforming larger-cap indices.

Among industries, solar, clean energy and regional banks led gains as traders eyed pockets of the markets that would benefit from lower interest rates.

On the macro front, August retail sales provided an upside surprise, growing by 0.1% month-over-month compared to the expected 0.2% decline. This stronger-than-anticipated data slightly reduced the likelihood of a more aggressive 50-basis-point rate cut, with market-implied probabilities for such a move slipping from 67% to 63%, according to the CME FedWatch Tool.

Short-dated Treasury yields rose as expectations for a substantial rate cut moderated. Meanwhile, the dollar strengthened, gaining 0.2%.

In the commodities market, gold retreated 0.7% from Monday’s record-high close. Oil prices increased by 1.3% following escalating geopolitical tensions in the Middle East.

Reports indicate a coordinated attack in Lebanon led to thousands of pagers linked to Hezbollah militants being detonated, resulting in numerous casualties within the Iran-backed organization.

Additionally, Iran’s ambassador to Lebanon is reportedly injured, though the official responsibility for the attack remains unclaimed.

Bitcoin (CRYPTO: BTC) jumped over 4%, buoyed by positive ETF inflows, signaling renewed investor interest in the digital asset space as interest rates shift.

Tuesday’s Performance In Major US Indices, ETFs

Major Indices	Price	1-day %chg
Russell 2000	2,220.44	1.3%
S&P 500	5,642.79	0.2%
Nasdaq 100	19,441.83	0.1%
Dow Jones	41,636.05	0.0%

According to Benzinga Pro platform:

• The SPDR S&P 500 ETF Trust (NYSE:SPY) was 0.1% higher to $563.44.
• The SPDR Dow Jones Industrial Average (NYSE:DIA) inched 0.1% up to $417.61.
• The tech-heavy Invesco QQQ Trust Series (NASDAQ:QQQ) also rose 0.1% to $473.60.
• The iShares Russell 2000 ETF (NYSE:IWM) rose 1.2% to $220.28.
• The Energy Select Sector SPDR Fund (NYSE:XLE) outperformed, up 1.2%. The Health Care Select Sector SPDR Fund (NYSE:XLV) lagged, down 0.9%.

Tuesday’s Stock Movers

• Moderna Inc. (NASDAQ:MRNA) surged over 6% after receiving approval from Health Canada for its updated SPIKEVAX COVID-19 vaccine, designed to target the KP.2 sub-lineage of SARS-CoV-2 in individuals aged six months and older.
• GE Vernova Inc. (NYSE:GEV) climbed 3.5% following an upgrade from Bank of America, which raised its rating on the stock from Neutral to Buy and increased the price target from $200 to $300.
• Hewlett Packard Enterprise Co (NYSE:HPE) advanced nearly 5% after Bank of America also upgraded its rating from Neutral to Buy and boosted the price target from $21 to $24.

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The image was created using artificial intelligence MidJourney.

Posted In: $BTC DIA GEV HPE IWM MRNA QQQ SPY XLE XLF XLK XLV