Goldman Sachs: Traders expected to buy S&P 500 under whatever scenario

US stocks are rising. Bonds are rising as markets reopen following a holiday, in part because investors are seeking safe haven after the escalation of Middle Eastern tensions. However, given that more speakers are scheduled for Tuesday, two Fed officials on Monday discouraged interest rate increases.

Investors, particularly oil speculators, will undoubtedly keep an eye on the Middle East for any escalation, but Wall Street has a habit of returning to business as usual as soon as inflation data and the beginning of earnings season are announced.

Tuesday’s lunchtime trading saw a jump in Wall Street stocks as investors hoped the Federal Reserve had stopped raising interest rates for the time being. The S&P 500 increased by more than 1.0% and the Dow Jones Industrial Average increased by almost 0.8%. The heavily tech-focused Nasdaq Composite increased by about 1.2%.

But despite a wider bond sell-off, Treasury rates kept declining, with the 10-year yield dropping 16 basis points to trade close to 4.63%. Gains followed two Fed members’ dovish remarks, which suggested that the recent spike in bond yields might result in the tightening of credit conditions the central bank is seeking. According to some analysts, this could provide policymakers with justification for calling an end to this cycle’s rate increases.

The IMF has cautioned that restrictive monetary policy must continue in most countries since central banks are “not quite there” in their efforts to bring stubborn inflation down to desired levels.

Investors were concerned about anticipated supply interruptions brought on by the Middle East conflict, and oil prices dropped after rising more than 4%. Individual stock prices for PepsiCo increased 1.1% as the company beat Wall Street expectations for the third quarter profit and increased its outlook for yearly profitability. PepsiCo is the creator of Pepsi beverage and Frito Lay snacks.