U.S. stocks closed higher Tuesday, with the Dow Jones leading the charge with a roughly 1% gain as investors continued piling into cyclical and blue-chip names. The rally pushed the Dow to fresh record highs, closing at 49,462.08 after gaining around 485 points. The S&P 500 added 0.62% to finish at 6,944.82, while the Nasdaq Composite climbed 0.65% to 23,547.17.
Market sentiment showed further improvement, with the CNN Money Fear and Greed Index rising to 52.1 from its previous reading of 47.9. Despite the uptick, the index remained firmly in the "Neutral" zone, suggesting investors are neither overly fearful nor excessively greedy.
Memory Chips Steal the Spotlight
One of the day's standout stories was the performance of memory chip stocks. Shares of Sandisk Corp. (SNDK), Western Digital Corp. (WDC), and Seagate Technology Holdings Plc. (STX) all posted sharp gains. The rally was fueled by expectations that memory prices are heading higher amid a global supply crunch, a dynamic that tends to be excellent news for companies making these chips.
Tesla's Rough Stretch Continues
On the losing side, Tesla Inc. (TSLA) fell more than 4%, marking its tenth decline in 11 sessions. That's a brutal stretch by any measure. The electric vehicle maker faced headwinds from competitive pressure in the robotaxi market, along with reports that it's losing market share in Europe to Chinese EV-maker BYD. When you're getting squeezed on multiple fronts, the market tends to notice.
Economic Data Comes in Soft
The economic picture was somewhat less rosy. The S&P Global services PMI declined to 52.5 in December from 54.1 in November, missing the preliminary reading of 52.9. Meanwhile, the S&P Global composite PMI fell to 52.7 in December, the lowest level in eight months. That was down from the preliminary reading of 53 and well below November's 54.2. While these numbers still indicate expansion (anything above 50 does), the deceleration is worth watching.
Sector Performance: A Mixed Bag
Most sectors on the S&P 500 closed in positive territory, with materials, health care, and industrials stocks posting the biggest gains. However, energy and communication services stocks bucked the broader trend, ending the session lower.
What Exactly Is the Fear & Greed Index?
For those unfamiliar, the Fear & Greed Index is a measure of current market sentiment based on the premise that fear depresses stock prices while greed lifts them. The index is calculated using seven equal-weighted indicators and ranges from 0 to 100, where 0 represents maximum fear and 100 signals maximum greediness. At 52.1, Tuesday's reading suggests the market is in a relatively balanced state.
Looking Ahead
Investors are looking forward to earnings results from Albertsons Companies Inc. (ACI), UniFirst Corp (UNF), and Constellation Brands Inc (STZ) today.