Equities found modest support as Treasury yields pulled back, easing pressure on growth stocks while investors weighed mixed economic signals.
U.S. stocks closed slightly higher on Tuesday as a decline in Treasury yields helped stabilize risk appetite, particularly in large-cap technology. The S&P 500 advanced modestly, with gains concentrated in megacap names, while the Nasdaq outperformed after recent volatility tied to interest-rate expectations. The Dow Jones Industrial Average lagged, weighed down by defensives and select industrials.
Shares of Apple (AAPL) rose as investors rotated back into high-quality growth franchises following last week’s selloff. The move came as the 10-year Treasury yield drifted lower, offering relief after hovering near recent highs that had unsettled equity valuations. Markets continue to recalibrate expectations for the path of monetary policy, balancing resilient economic data against signs of cooling in certain sectors.
Investors remain focused on the policy outlook from the Federal Reserve, with recent comments reinforcing a data-dependent stance rather than signaling imminent rate cuts. While inflation has moderated from its peak, officials have emphasized the need for sustained progress before easing policy. That posture has kept yields elevated by historical standards, shaping sector leadership and equity multiples.
In Europe, stocks finished mixed as gains in technology and healthcare offset weakness in energy and financials. The Stoxx Europe 600 hovered near flat, with investors digesting slower regional growth alongside a steady policy tone from the European Central Bank. Currency markets were largely rangebound, reflecting limited conviction ahead of upcoming economic data releases.
Volatility remains subdued, suggesting investors are growing more comfortable with the current rate environment, though positioning remains cautious. Fund flows show selective exposure to equities rather than broad risk-on behavior, underscoring sensitivity to incoming inflation and labor-market data.
Looking ahead, markets are likely to remain driven by macro signals rather than earnings, with Treasury yields continuing to set the tone for equity performance. For now, easing pressure in rates has provided short-term breathing room, but investors appear reluctant to chase rallies without clearer confirmation that inflation is firmly under control.
