4:15pm: Nvidia rally leads tech rebound
Stocks ended mixed on Tuesday as Wall Street largely dismissed concerns over a nuclear escalation in the Russia-Ukraine conflict.
The Nasdaq rose over 1%, driven by Nvidia's nearly 5% surge following upbeat analyst notes ahead of its earnings report.
The S&P 500 edged up 0.4%, recovering from early losses, while the Dow Jones slipped 0.3% despite climbing off session lows.
2:35pm: Canadian inflation increases
Up north, inflation reached the Bank of Canada’s (BoC) 2% target in October, up from 1.6% in September, driven by smaller declines in gasoline prices and increases in clothing and footwear costs.
Excluding gasoline, inflation remained steady at 2.2% year-over-year (yoy). Core inflation measures rose, with trimmed and median averages increasing to 2.55% yoy from 2.35% in September. Services inflation decelerated to 3.6% yoy, its lowest since January 2022, supported by slowing shelter and mortgage interest costs.
The BoC is expected to cut interest rates by 25 basis points (bp) in December to support the weak economy, following its 50bp cut in October. While further large cuts appear unlikely, the BoC is projected to reduce rates to 3.0% by 2025, contingent on economic recovery and stronger U.S. growth.
1:30pm: Mind the gap
Small-cap stocks reversed much of their post-election rally last week, driven by overbought conditions and rising bond yields.
Additionally, significant selling in the biotech sector, the second-largest subindustry within small caps, further pressured the group. This selling followed disappointing results from some drug trials and the appointment of Robert F. Kennedy Jr. as Secretary of Health and Human Services by President-Elect Donald Trump.
"The valuation argument for small caps is losing merit," LPL Financial's Adam Turnquist wrote.
Turnquist noted that the Russell 2000 Index is currently trading at 28.4 times its blended-forward earnings per share (EPS) estimates, almost four points above its 10-year average. Additionally, small-cap revenue growth has been weak, with third-quarter and fourth-quarter revenue growth forecasted at just 0.0% and 0.2%, respectively. In contrast, the S&P 500 is expected to see revenue growth of 6.2% and 4.3% for the same periods.
"Since November 5, there has been considerable excitement around small caps," Turnquist said. "However, the technical evidence does not confirm a shift toward sustainable small cap leadership."
12:25pm: Nuclear concerns linger
Stocks had partially recovered by midday Tuesday after a steep early decline, driven by concerns over a potential nuclear escalation in the Russia-Ukraine war.
The Nasdaq reversed losses, gaining approximately 0.5% and the S&P 500 edged back to the flatline after dropping below its key breakout level. The Dow Jones Industrial Average fell by about 0.5%.
Investor sentiment was shaken by news that Russian President Vladimir Putin signed a revised nuclear doctrine allowing for the expanded use of atomic weapons. As a result, safe-haven assets like U.S. bonds and gold saw gains, with the 10-year Treasury yield dropping to around 4.38%.
Gold rose 0.5% to above $2,600 per ounce, and Bitcoin increased by over 1%, trading above $92,600.
11:15am: Holding pattern
Markets are in a cautious holding pattern as investors await key developments like President-elect Donald Trump's pick for Treasury Secretary and Nvidia's earnings report.
"Although the potential for significant moves are somewhat constrained by Nvidia's impending earnings reports on Wednesday, tech shares rose in tandem with Wall Street's comeback from last week's sharp losses," Tickmill's Patrick Munnelly commented.
Market expectations for a quarter-point interest rate cut at the Federal Reserve’s upcoming December meeting have decreased, with the probability now standing at below 59%. This is down from 62% the previous day and over 65% a week ago, according to CME FedWatch data.
"Markets view Trump's projected fiscal expenditures, higher tariffs, and tougher immigration as inflationary, which might impede Fed rate cuts at a time when a string of strong economic data is already preventing them," Munnelly said.
"Trump has started to nominate people; last week, he filled jobs in the defence and health sectors, but the Treasury secretary and trade representative, two crucial positions for the financial markets, have not yet been revealed."
9.57am: Dow Jones, Nasdaq open lower
The Nasdaq 100 opened around 0.2% lower while the Dow Jones Industrial Average plummeted around 0.75%.
As for the wider market, the S&P 500 opened around 0.4% below Monday’s closing price.
Super Micro’s Nasdaq listing has won a stay of execution after submitting a compliance plan to the Securities and Exchange Commission (SEC).
The server maker, which delayed its regulatory filings after accounting firm EY jumped ship, has tapped auditor BDO to assist with the plan.
Super Micro shares soared 20% on the news.
Walmart Inc (NYSE:WMT, ETR:WMT) is doing most of the heavy lifting this morning. The retail giant is up around 3.6% after increasing its full-year guidance.
Warner Bros Discovery Inc (NASDAQ:WBD, ETR:J5A) and Intuit Inc (NASDAQ:INTU, ETR:ITU) are among the biggest Nasdaq fallers at 3.7% and 5.4% respectively.
8.10am: Stocks to fall
The Nasdaq 100 is tipped to open essentially flat when trading commences this Tuesday, following a buoyant Monday that saw the tech index surge by 145 points.
Futures contracts suggest a sharp downturn for the Dow Jones Industrial Average though. It is expected to open 200 points lower after shedding 55 points yesterday.
The broader S&P 500 index is also expected to open in the red.
Walmart Inc (NYSE:WMT, ETR:WMT) looks set to rally more than 3.5% following the retail giant’s better-than-expected third-quarter results.
Revenue ticked up 5.5% to $169.6 billion over the three months to October, fueled by growth in food and consumables sales, alongside general merchandise goods for the second consecutive quarter, after 11 successive declines previously.