• Oil: Private survey of inventory shows a headline crude oil draw
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• Crude oil rebounds as Hormuz tensions rise. Can buyers take back full control?
• Fed Schmid: Labor force remains a in a good place
• Although the broader indices are looking to close at record levels, the Magnificent 7 (sans Nvidia) lag behind
• US treasury sells $58 billion of 3 year notes at a high yield of 4.932%
• Fed’s Daly: More tightening depends on whether AI, tariff and energy shocks persist
• BoJ’s Sato supports further rate hikes but avoids specifying timing. USDJPY remains confined.
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• US International Trade balance for August -105.6B vs -102.0B.
• Canada August trade balance $4.20 billion vs $1.55 billion expected
• investingLive European news wrap: Risk sentiment improves as oil falls and bonds rise
• Morning Kickstart: Stocks eye records as oil and Treasury yields fall

U.S. stocks added to their gains on Tuesday, with the S&P 500, Nasdaq Composite and Nasdaq 100 closing at record levels. The Dow also advanced, but the Russell 2000 moved lower. The large-cap buyers kept control. The smaller companies did not join the party.

The economic focus was the wider-than-expected U.S. trade deficit, with the AI buildout helping swell imports. Meanwhile, Middle East tensions pushed crude oil around. An early decline gave way to a rebound, with prices trading near their session highs as the stock market closed.

Treasury yields: A mixed finish

Treasury yields were lower in late trading:

• 2-year: 4.7975%, down 3.55 basis points.
• 5-year: 5.0356%, down 3.04 basis points.
• 10-year: 5.2815%, down 2.95 basis points.
• 30-year: 5.6599%, down 0.41 basis points.

The distinction matters. Shorter-term yields eased the most as traders take out the tightening. The odds of an October hike is now 19.4%, while there is a 70% chance the rate of a 25 basis point hike by the end of the year.  

U.S. stocks: Records, but uneven participation

The closing levels were:

• Dow industrial average: 51,526.14, up 253.03 points or 0.49%.
• S&P 500: 7,818.92, up 44.96 points or 0.58%.
• Nasdaq Composite: 27,599.79, up 122.48 points or 0.45%.
• Russell 2000: 2,830.30, down 16.84 points or 0.59%.
• Nasdaq 100: 31,224.47, up 148.03 points or 0.48%.

The S&P and Nasdaq records tell one story. The Russell’s decline tells another. The rally continued at the index level, but participation was uneven. That is something to keep an eye on as traders assess whether the next move higher brings more of the market along.

U.S. trade deficit: The AI buildout lifts imports

The August trade deficit widened to $105.6 billion, worse than the $102.0 billion estimate and July’s revised $92.8 billion gap. Imports increased 4.3%, while exports rose 1.4%.

As outlined in InvestingLive’s trade report, industrial supplies and capital goods helped drive the import increase, consistent with demand from the AI infrastructure buildout. investinglive.com

A wider trade gap can weigh on measured GDP growth. However, imports of equipment also reflect investment: spending that may expand productive capacity even as it widens today’s deficit.

Crude oil: An early decline turns into a late rebound

Middle East tensions kept oil traders on their toes. Crude reversed its earlier losses and was trading near the session highs as the stock market closed.

• WTI futures: $89.97, up $0.54 or 0.60%.
• Spot U.S. oil: $89.93, up $0.64 or 0.72%.

The recovery is a reminder that supply-risk headlines can quickly change the tone. Oil’s earlier decline offered some relief on inflation. The rebound reduced that relief and kept the Middle East firmly on traders’ radar. See technical analysis post HERE for levels to eye in the new day. 

Gold and silver move higher

Both precious metals advanced in late trading:

• Spot gold: $4,163.40, up $23.12 or 0.56%.
• Silver: $61.3570, up $0.3150 or 0.52%.

Gold gained despite the higher 10-year Treasury yield, which would normally be a headwind. Lower yields elsewhere on the curve offered some support, while geopolitical uncertainty remained a potential source of demand.

Bitcoin sits out the stock-market advance

Bitcoin was trading at $85,624, down $132 or 0.15%.

The decline was modest, but Bitcoin did not follow the major stock indices higher. For this session, the record-setting equity rally did not translate into a comparable crypto advance (See post HERE. The price is compressing. Be on an alert for a break and run soon).

What carries forward?

The large-cap stock buyers remain in control, but the Russell’s weakness deserves attention. The AI investment story continues to show up in the trade data, while oil remains sensitive to Middle East headlines. Add a mixed Treasury market, and there is plenty for traders to watch as they wait for the next shove.

This article was written by Greg Michalowski at investinglive.com.

Source: Investing Live - News