US stocks rise; bonds surge on cooling labor market data

Another day, another small gain for US stocks as the S&P 500 closed up 0.2%, extending its winning streak to three.

More defensive sectors like real estate and consumer staples led the way higher on Tuesday, though Nvidia still chipped in with a 1.2% advance. Meanwhile, commodity-linked stocks bore the brunt of selling, with the materials sector down 1.1% and energy stocks falling 1%.

While US stocks have been subdued at the index level as of late, the bond market rally continues to be intense. The iShares 20+ Year Treasury Bond ETF gained 1.2%, its fourth straight daily gain. Data continue to point to a cooling in US economic activity: on the heels of yesterday’s disappointing manufacturing survey, April’s JOLTS report showed job openings fell by more than anticipated and are nearing pre-pandemic levels. Traders have gone from pricing in as little as 32 basis points of easing for 2024 last week to 46 basis points as of Tuesday.

Outside of the US, Indian stocks faced significant selling pressure, with the iShares MSCI India ETF off 6.1% after surprising early election results showed Prime Minister Modi’s party is unlikely to retain its majority. Companies seen as close to Modi fared particularly poorly.