U.S. stocks rise 0.3% as oil drop eases inflation fears

U.S. stocks rose Tuesday as a 3.1% drop in oil prices and tepid economic data eased inflation concerns, lifting the S&P 500 0.32% to 7,677.28.

"Markets appear to be pricing economic pressure as a lower-risk path for physical supply than kinetic action, which is why the initial reaction was for oil to move lower rather than spike higher," said Tim Waterer, chief market analyst at KCM Trade.

The Dow Jones Industrial Average added 160.24 points, or 0.30%, to 53,577.40, while the tech-heavy Nasdaq Composite climbed 171.11 points, or 0.66%, to 26,151.30, the strongest of the three benchmarks. Information technology led the S&P 500's advance and consumer staples lagged, while financial stocks extended a strong run on expectations of a slate of deals. Oil lost $2.65 to close at $82.36 a barrel in New York even after another tanker was struck near the Strait of Hormuz overnight, as traders judged the new round of U.S. economic sanctions on Iran modest in scale. ING commodity strategists said in a note that the market seemed "largely unfazed" by Washington's push for tighter economic pressure on Iran.

The retreat in crude, a critical input to the inflation outlook, pulled Treasury yields lower. The 30-year yield declined 0.056 percentage point to 5.174%, the lowest since Aug. 5, while the 10-year fell 0.065 percentage point to 4.638% and the two-year slipped 0.038 percentage point to 4.195%. The dollar ticked down against rivals as the U.S. and Canada headed into a trade war, buoying commodities priced in the greenback. Copper futures gained 1.67% to $6.7095 a pound, the highest close ever in New York, while gold eased 0.06% to $4,638.10 a troy ounce, still up 15% for August.

Economic data reinforced the case for cooling price pressures. Sales of new single-family homes slid 10.5% to 607,000 in July, a larger drop than expected that suggested rising mortgage rates were taking a greater toll on the market. The Conference Board's August reading of consumer confidence fell to 89.4 from 90.2 in July, while the S&P CoreLogic Case-Shiller National Home Price Index rose 1.5% in the 12 months through June, up from a 1.2% gain in May.

Dick's Sporting Goods plunged 31% to $124.31 after the sportswear chain cut its operating income outlook, citing tough conditions in athletic footwear and apparel. The retailer made a big bet on sneakers when it bought rival Foot Locker in 2025 but has been forced to cut prices on shoes; shares of suppliers Nike and Adidas fell in sympathy.

The market's next test comes from the AI trade. Anthropic, maker of the Claude AI models, is likely to tell investors its potential revenue opportunities exceed $30 trillion as it previews an initial public offering expected later this year, topping SpaceX's $28.5 trillion estimate. Inspire Brands, owner of Dunkin' and Arby's, is also exploring an IPO. Nvidia's quarterly results, due after Wednesday's close, and the July personal consumption expenditures report will shape expectations for technology valuations and Federal Reserve policy in the days ahead.

This article is for informational purposes only and does not constitute investment advice.