Tech Stocks Rise, Materials Sector Rallies On China's Stimulus, Nvidia Surges: What's Driving Markets Tuesday?

Wall Street inched higher on Tuesday, with the Nasdaq 100 outperforming other major indices, while cyclical sectors linked to metals and industrial commodities saw strong gains, fueled by a surprise stimulus package from China’s central bank.

The People’s Bank of China (PBOC) unveiled a series of aggressive measures, including cuts to the reserve requirement ratio (RRR) for banks and a reduction in the seven-day repo rate, following a recent cut to the 14-day reverse repo rate. These moves are expected to inject roughly $140 billion (1 trillion yuan) into the banking system, providing banks with additional liquidity to boost lending.

Chinese equities skyrocketed on the news, with the iShares China Large-Cap ETF FXI soaring over 8%, marking its largest single-day gain since March 2022.

Commodities followed suit with copper and silver climbing more than 3% each, while gold rose 0.7%, hitting record highs for the fourth consecutive session.

The Nasdaq 100 posted a 0.5% gain, leading U.S. indices, while the S&P 500 remained nearly flat, hovering just shy of its all-time highs.

The U.S. dollar weakened by 0.4% following a lower-than-expected September consumer confidence report from the Conference Board. This data has bolstered expectations for a potential 50-basis-point rate cut by the Federal Reserve in November.

Treasury yields fell on short-term maturities, while longer-dated yields held steady. Oil prices climbed 1.2%, though concerns about U.S. demand lingered due to the disappointing consumer confidence figures.

Bitcoin BTC/USD slipped 0.2% failing to join the China-led rally across other risk assets.

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust SPY rose 0.1% to $570.49.
• The SPDR Dow Jones Industrial Average DIA flattened at $420.90.
• The tech-heavy Invesco QQQ Trust Series QQQ rose 0.6% to $485.85.
• The iShares Russell 2000 ETF IWM stalled at $220.69.
• The Materials Select Sector SPDR Fund XLB outperformed, up 1.2%. The Financial Select Sector SPDR Fund XLF lagged, down 1.2%.

• Chinese stocks rallying Tuesday included Tencent Music Entertainment Group – ADR TME up 14%, JD.com Inc. JD up over 10%, PDD Holdings Inc – ADR PDD up 10%, XPeng Inc – ADR XPEV up 9%, NIO Inc – ADR NIO up 8.7% and Li Auto Inc. LI up 9%.
• NVIDIA Corp. NVDA rallied nearly 4% amid rising growth prospect in China.
• Materials stocks showing the largest gains were MP Materials Corp. MP up 10%, Freeport McMoRan Inc. FCX up 7.5%, Alcoa Corp. AA up 7.6%, and Southern Copper Corp. SCCO, up 7.3%.

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