Record Highs Driven by Mining Surge
The S&P 500 and Dow Jones Industrial Average reached new record highs on Tuesday, despite weak consumer confidence data. This surge was primarily fueled by a significant rise in mining stocks, following the announcement of a comprehensive stimulus package by China.
Initially, gains were modest as the Conference Board reported a surprising dip in September's U.S. consumer confidence, attributed to increasing concerns about the labor market. However, the sentiment shifted due to China's policy updates.
Impact of China's Stimulus
Zachary Hill, head of portfolio management at Horizon Investments, highlighted, "Today's price action is predominantly about what happened overnight with the policy announcements from China, direct support for their equity market and pledges to cut interest rates in the future, has caused a really sharp move in international stocks in general." This has had a ripple effect on the U.S. market, particularly benefiting China-sensitive industries like metals and mining.
Sector Performance
- Dow Jones: +83.57 points (0.20%) to 42,208.22
- S&P 500: +14.36 points (0.25%) to 5,732.93
- Nasdaq Composite: +100.25 points (0.56%) to 18,074.52
Among the S&P sectors, materials outperformed, rising by 1.35%. Metal prices saw a boost as China, the world's second-largest economy, introduced its largest stimulus since the pandemic to tackle deflation.
Mining and Tech Stocks
Copper and lithium miners were particularly strong performers:
- Freeport-McMoRan: +7.93%
- Southern Copper: +7.22%
- Albemarle: +1.97%
- Arcadium Lithium: +3.2%
U.S.-listed shares of major Chinese companies also climbed, with Alibaba up 7.88%, PDD Holdings up 11.79%, and Li Auto up 11.37%, mirroring gains in their domestic markets.
In the tech arena, megacap stocks had mixed results. Nvidia saw a rise of 3.9%, while Microsoft fell by 1.15%. Overall, the tech sector rose 0.79%, with the Philadelphia SE Semiconductor Index gaining 1.23% as Qualcomm and Intel advanced.
Economic Indicators and Market Outlook
Federal Reserve Governor Michelle Bowman noted that inflation measures remain "uncomfortably above" the Fed's 2% goal, suggesting caution as the Fed contemplates interest rate cuts.
Investors are closely watching upcoming weekly jobless claims and personal consumption expenditure data.
Among notable stock movements, Visa fell 5.49% following a Department of Justice antitrust lawsuit, impacting the financial sector which slipped 0.92%.
Advancing issues outpaced decliners with a 1.93-to-1 ratio on the NYSE. There were 636 new highs and 43 new lows on the NYSE. The S&P 500 posted 62 new 52-week highs with no new lows, while the Nasdaq Composite recorded 103 new highs and 101 new lows. Trading volume on U.S. exchanges was 11.42 billion shares, compared to the 11.60 billion average over the last 20 trading days.
