U.S. stocks are experiencing an upward trend on Tuesday, with the S&P 500 gaining 0.5% and on track to surpass its all-time high set in August. The Dow Jones Industrial Average rose 185 points, or 0.4%, as of 9:35 a.m. Eastern time, while the Nasdaq composite increased by 0.6%, following its own record high achieved the previous day.
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The surge in stock prices comes after Brent crude oil, the international benchmark, fell 2.3% to $97.97 per barrel. This marks a decrease from nearly $110 a few weeks ago and alleviates some inflationary pressures affecting consumers and businesses globally. The drop in oil prices has also contributed to easing tensions in the bond market, with the yield on the 10-year Treasury note declining to 5.28% from 5.31% at the end of Monday.
High global yields have recently hit significant levels, making borrowing more expensive and dampening investor enthusiasm for high-priced stocks. However, strong corporate profits have helped sustain the stock market's rally amid concerns about inflation and escalating oil prices.
Constellation Energy Group emerged as one of the largest gainers on the market, with shares jumping 11.5% after it announced a long-term electricity supply agreement with Google, equivalent to the output of a new nuclear reactor. The rise in demand for electricity, fuelled by the growth of data centers for artificial intelligence, is impacting overall construction and materials in the economy.
Option Care Health saw a dramatic increase of 32.9% following announcements that CD&R and McKesson are acquiring the infusion services provider for $32.05 per share, valuing the company at approximately $5.8 billion. CD&R is a private investment firm, while McKesson, a healthcare services company, added 0.7% to its stock value.
Lamb Weston, which specializes in frozen potato products, reported strong profits and revenue in its latest quarter, exceeding both its own forecasts and analysts' expectations, resulting in a 7.3% increase in its stock. Despite facing unexpected cost increases due to high inflation, CEO Mike Smith indicated that the company has raised its profit forecast for the entire fiscal year. Market expectations are elevated as companies across various industries prepare to disclose their earnings for the July to September period.