Stock markets recover from global decline – all indices in green

Wall Street responded positively on Tuesday, reversing the previous sell-off, with all indexes rising nearly 1% or more.

However, these indicators, which fell in the last hour of trading, were not enough to restore the losses of the previous days. Economic analysts agree that the next few days will be full of uncertainty, which will not allow the market to stabilize. However, at the moment, buyers have returned, sending all indicators green.

The Dow Jones Industrial Average rose 0.76% to 38,997, well below 40,000. The S&P 500 rose 1.04% to 5,240, and the Nasdaq gained 1.03% to 16,366. Bond yields also rose, with the 10-year yield up ten basis points to 3.889% and the 2-year yield up 3.987%.

Despite the improvement in sentiment in international markets, starting with a strong rally in the Japanese stock market, which had its best session since October 2008, the underlying causes that led Wall Street into a correction cycle have not been overcome. As a result, analysts warn that volatility will remain high in the short term.

“I wouldn't be surprised if pressure increases in the coming weeks, although I think the fear of growth is overblown.“,” Baird's Ross Mayfield said on CNBC.

“The big question now is whether the fears that pushed the market into mass liquidations have subsided. Signs of instability are expected to persist” Quincy Crosby of LPL Financial told Bloomberg.

In addition, Goldman Sachs noted in its commentary that repositioning in stocks after a major correction such as the one the market experienced last month usually turns out to be a very profitable option. Although Goldman Sachs analyst Peter Oppenheimer was quick to add in an interview with CNBC that the market correction phase “It's not over yet.”

This means that the market is likely to remain cautious as it awaits the Fed's decisions and the start of monetary easing to avoid the worst-case scenario of a recessionary slide. It is for this reason that the scenario of early Fed intervention outside of the program in August continued to fuel traders' bets.

But the more cool-headed economists continued to insist that the Fed makes decisions based on actual economic data, not on the advice or direction of Wall Street, and therefore would not rush to intervene early unless it faced real risk to the economy.

“It's incredible to hear people talking about an interim cut (in interest rates). It will not happen. However, it is more likely and realistic that the change of course at the meeting scheduled for September 18 will be more dramatic, and a dynamic reduction in interest rates by 50 basis points, rather than by 25 basis points, as the market had previously expected,” – explained renowned economic adviser Mohamed El-Erian in an interview with Yahoo Finance.

At the stock level, tech companies and big tech names like Nvidia and Meta led the rally, which saw all individual sectors move into positive territory.

Cryptocurrency companies have grown following a corresponding rebound in cryptocurrency prices, led by Bitcoin. Also among the top gainers were Kenvue, after the bandage maker reported strong quarterly results, as well as Caterpillar and Palantir Technologies for the same reason.

Lumen Technologies also saw a big boost after it revealed it had raised $5 billion in new funding in the artificial intelligence sector.

ZoomInfo Technologies was among the few losers of the day after disappointing quarterly results, while Apple shares remained in negative territory as they struggle to recover from news that Warren Buffett sold half of his stake in the tech company.

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