US equities rally as oil prices retreat and bond yields ease
Falling crude costs and stabilising bond markets lift sentiment ahead of Nvidia earnings, while corporate updates from Target, Lowe’s, and Intuit provide mixed signals on consumer resilience and AI-driven restructuring.
US equities advanced decisively on Wednesday, shedding the volatility of earlier sessions as declining oil prices and a retreat in bond yields alleviated persistent inflation concerns. The S&P 500 and the Dow Jones Industrial Average both rose 0.8%, while the technology-heavy Nasdaq Composite surged 1.2%. The rally marked a rebound from Tuesday’s declines, driven by data suggesting that the Federal Reserve’s pressure on growth stocks may be easing as market participants digested softer inflation signals.
The primary catalyst for the shift in sentiment was a significant drop in crude oil prices, with West Texas Intermediate (WTI) falling below the $100 per barrel mark and Brent crude declining 5%. This movement followed reports from financial data provider LSEG that three crude oil tankers successfully transited the Strait of Hormuz, a vital chokepoint that had been closed, raising fears of global supply shortages. The easing of geopolitical tensions, bolstered by comments from President Trump suggesting a potential resolution with Iran, helped curb the energy-driven inflation fears that had previously weighed on investor confidence.
In the fixed income markets, the sell-off in longer-dated government bonds moderated slightly, with the 10-year Treasury yield dipping to 4.65% and the 30-year yield settling at 5.18%. While these yields remain above key psychological thresholds and near levels not seen in nearly two decades, the pullback provided temporary relief to equity valuations. Analysts noted that a sustained reduction in oil prices or softer labour data could further support equities by reducing the pressure for higher interest rates.
Corporate earnings delivered a mix of robust consumer spending and strategic workforce reductions. Retailers Target and Lowe’s reported strong first-quarter results, beating expectations on both revenue and earnings, with Target even raising its full-year sales outlook despite broader consumer headwinds. Conversely, Intuit announced it is cutting approximately 17% of its global workforce, or roughly 3,000 employees, as part of a restructuring effort to prioritise artificial intelligence initiatives. The move underscores a growing trend among major firms, including Block and Meta, to leverage AI for operational efficiency.
Market attention now turns to Nvidia’s earnings report, due after the closing bell, which is viewed as a critical indicator for the sustainability of artificial intelligence demand. With the stock pricing in a potential 5.5% move in either direction, investors are seeking clarity on whether spending in the sector is holding up. Meanwhile, AMC Entertainment shares jumped 17% after CEO Adam Aron purchased an additional 250,000 shares, citing strong confidence in the company’s future box office performance.
