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U.S. stocks rose on Tuesday, recovering from Monday’s sharp decline.
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The S&P 500 and Nasdaq 100 rose 1%, driven by investor fears that a possible recession would ease.
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The CBOE Volatility Index fell 29%, indicating that investors bought the dip.
Investors took a hit on Tuesday as stocks recovered after Monday’s sharp decline.
The S&P 500 and Nasdaq 100 rose about 1% during Tuesday’s trading session as investors grappled with whether unwinding the carry trade in the yen was a short-term technical factor.
Worries about a looming recession after the Sahm rule trigger last week were rejected by the inventor of the rule, former Fed official Claudia Sahm, who told Business Insider that the rise in unemployment is driven by an increase in labor supply rather than a decrease in labor demand.
“The U.S. economy is still growing. We’re still adding jobs. We’re still spending, even after inflation,” Sahm said.
Meanwhile, Wall Street strategists said the current stock market decline, with the S&P 500 down about 8% since July’s record high on Monday, is completely normal.
“While such sharp declines in stock prices are concerning, looking back at historical data on the S&P 500 Index reminds us that dips, pullbacks and corrections of 10% or more are a normal and healthy part of any bull market. On average, stocks experience declines of more than 5% more than three times a year and a correction of 10% or more about once a year – even in positive years,” said LPL portfolio strategist George Smith.
The CBOE Volatility Index, better known as the VIX, fell 29% on Tuesday. This decline indicates that investors are using the stock market’s decline over the past week as an opportunity to buy shares.
Tuesday’s gains were broad-based, with four sectors posting gains of about 2% or more. Shares of Nvidia And Metaplatforms rose by about 4%, while Eli Lilly And Berkshire Hathaway up about 2%.
Goldman Sachs CEO David Solomon dismissed the idea of an emergency interest rate cut by the Federal Reserve, because he sees no threat of recession on the table.
“I don’t expect you’ll see anything before September.” Solomon said about a Fed rate cut. “The economy will continue to move along and we probably won’t see a recession.”
Here’s where the US indexes stood at 4pm on Tuesday:
Here’s what else happened today:
In commodities, bonds and crypto:
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West Texas average crude rose 0.33% to $73.18 a barrel. Brent crude oilthe international benchmark, rose 0.21% to $76.46 per barrel.
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Gold fell 0.65% to $2,428.40 an ounce.
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The yield on ten-year government bonds rose by 9 basis points to 3.89%.
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Bitcoin rose 4.80% to $56,626.
Read the original article Business insider