U.S. stocks gained some traction on Tuesday, with major indexes rising as investors continued to interpret equity valuations through the lens of Treasury market signals and growing expectations of monetary easing.
US stocks gain slight traction on Tuesday
The S&P 500 and the Nasdaq both advanced, while the Dow Jones Industrial Average climbed 200 points, supported by a combination of soft economic data, dovish interest rate bets, and robust corporate earnings in select sectors.
Investor sentiment was notably influenced by the latest labor market data, which showed that U.S. job openings dropped to 7.19 million in March—falling short of expectations and marking a continued decline from last year’s peaks. The weaker-than-expected JOLTS figures suggest that demand for labor is easing, reinforcing hopes that inflationary pressures from wage growth may be subsiding. Simultaneously, the Conference Board’s consumer confidence survey revealed a sharp deterioration in sentiment, with a marked drop in expectations for the coming months, heightening concerns about a potential economic slowdown.
These data points prompted a sharp repricing in interest rate futures markets. Investors are now anticipating 100 basis points in Federal Reserve rate cuts by the end of the year—up from just 50 basis points forecast a month ago—despite the Fed’s more cautious guidance. The shift helped lift rate-sensitive sectors such as technology and real estate, with tech stocks leading the gains.
Earnings impact on stocks
On the corporate front, strong earnings reports provided additional support to the broader market. Honeywell and Pfizer surged over 5% and 4%, respectively, after both companies beat Wall Street expectations and issued upbeat quarterly updates. In particular, Pfizer’s performance was boosted by strong demand for its newer oncology treatments and cost-cutting measures, while Honeywell benefited from resilient industrial demand and easing supply chain bottlenecks. Software companies also performed well, buoyed by solid cloud and enterprise spending data.
However, not all companies joined the rally. United Parcel Service (UPS) declined by 2% after the logistics giant declined to provide full-year guidance, citing elevated trade and economic policy uncertainty—particularly related to tariffs. General Motors also came under pressure, falling 4% after it announced the suspension of its share buyback program and withdrew its earnings outlook, citing risks tied to potential tariffs and rising material costs. These cautious moves from major U.S. multinationals highlighted lingering business unease over trade policy direction, especially as tariff threats escalate.
Tariff concerns also rippled through macroeconomic data
Tariff concerns also rippled through macroeconomic data, with the U.S. posting its largest goods trade deficit on record in March. The ballooning gap was driven by a surge in preemptive imports ahead of anticipated tariffs, suggesting that companies are rushing to build inventories before new levies take effect. This trend may temporarily inflate near-term growth figures but poses risks for future inventory drawdowns and supply chain imbalances.
Overall, the equity rally appears to be underpinned by growing bets on monetary easing and selective corporate resilience. Still, headwinds from trade frictions, policy uncertainty, and deteriorating consumer sentiment continue to pose risks to the broader market outlook.
