Tuesday brought a split session for the three major U.S. stock indexes, as traders weighed a wave of earnings reports from large banks while a sharp overnight selloff in South Korean equities dragged down memory chip names.

The Dow Jones Industrial Average gained 0.76%, while the S&P 500 slipped 0.08% and the Nasdaq Composite dropped 0.32%.

Among the "Magnificent Seven," Apple rose 1.66%, Microsoft added 1.37%, Alphabet climbed 1.24%, and Amazon edged up 0.30%, while Meta Platforms fell 0.16%, NVIDIA lost 0.92%, and Tesla declined 1.37%.

South Korea's KOSPI index tumbled 5.5%, hitting its lowest level since July 31. Memory chip stocks came under pressure amid concerns over sector valuations and intensifying competition from China. This week, domestic chipmaker ChangXin Memory Technologies (CXMT) announced plans to launch a more powerful chip by the end of the year. SK Hynix and Seagate Technology both plummeted 6%, Western Digital dropped 7%, and Micron Technology and SanDisk each fell more than 4%.

This early batch of results could set the tone for the earnings season, with the market holding high expectations. Data from FactSet shows analysts on average expect profit growth of nearly 30% year-over-year for S&P 500 companies. Anthony Saglimbene, chief market strategist at Ameriprise Financial, wrote: "Three categories of factors may determine how investors view this earnings season: 1) banks (reflecting the health of consumers and businesses); 2) large-cap tech (progress on AI commercialization); 3) the energy sector (whether oil-driven profits can be sustained). Beyond that, against a backdrop of high interest rates, elevated costs, and uncertain macroeconomic prospects, every industry across the market will be closely watching the operating health of consumers and businesses."

On Tuesday, investors will also parse U.S. existing home sales data while keeping an eye on public remarks from Federal Reserve officials Tom Barkin and Susan Collins. Later this week, U.S. September inflation data is due. Treasury yields have recently touched multi-decade highs, and this inflation reading could trigger significant swings in yields. The U.S. bond market was closed Monday for the Indigenous Peoples' Day holiday.

U.S. stocks closed mixed on Monday. The Dow Jones Industrial Average finished more than 195 points higher, but declines in memory chip stocks weighed on the Nasdaq Composite and the S&P 500.

European stocks moved broadly higher on Tuesday, with the pan-European Stoxx 600 up 0.7% in early trading. The UK's FTSE 100 led major European indexes with a gain of 0.8%.

Bond Yields Steady

Global bond markets rallied broadly. French government bonds were particularly notable, with the spread between French 10-year yields and comparable German bunds narrowing by about 4 basis points to below 140 basis points. The U.S. benchmark 10-year Treasury yield fell to 5.193%, moving further away from last week's high of 5.364%. The yield had earlier climbed to its highest level in 24 years. Over the past few weeks, inflation pressures from elevated energy prices, combined with worries about swelling government debt, have triggered multiple rounds of bond market selling, pushing borrowing costs in several economies to multi-decade highs.

Charu Chanana, chief investment strategist at Saxo Bank, said investors are buying back into U.S. Treasuries after the recent sharp rise in yields, but she views this more as a "tactical rebound." She noted: "Sticky inflation, high oil prices, and heavy government borrowing remain the main obstacles to a sustained recovery in the bond market."

Eyes on U.S. CPI

Traders are awaiting Wednesday's U.S. inflation data for clues on the Fed's future monetary policy path. According to the CME FedWatch tool, the market currently prices an 80.6% probability that the Fed will hold rates steady at its meeting later this month, up from 51% a month ago.

In oil markets, Brent crude ended a three-session winning streak, with traders assessing energy supply risks from an attack on Saudi Arabia while weighing the prospect of increased diesel supply from Russia. Brent crude futures fell 1.7% to $104.78 a barrel, slightly below the two-week high touched in the previous session.

With Treasury yields and oil prices both pulling back, the dollar posted its first decline in a week.

Goldman, Morgan Stanley and Other Wall Street Banks Favor a Treasury Rebound

After weeks of selling drove U.S. Treasury yields to multi-year highs, Wall Street strategists are re-examining the investment case for Treasuries. Institutions including Goldman Sachs, Morgan Stanley, and Citigroup argue that bond valuations are becoming more attractive as yields have climbed sharply. However, there is still clear disagreement among major institutions over the Fed's future rate path and the timing of a Treasury rebound. Goldman Sachs believes signs of stress are emerging in credit markets, and that improved investor positioning and market technicals could help create conditions for a Treasury rally. Citigroup favors shorter-dated Treasuries, with strategists saying the Fed is unlikely to raise rates to 2023 highs as inflation cools and wage growth weakens. Morgan Stanley likewise sees Treasuries as attractive but recommends investors wait until after the Fed's meeting this month and the U.S. midterm elections before considering entry.

Is the Fed's Rate-Cut Signal Hiding in Walmart's Stock Price? This Indicator Is Flashing a Recession Warning Again

Analysis by Jim Paulsen, former chief investment strategist at Leuthold Group, shows that Walmart underperformed from May to August 2026, but since August it has outperformed the S&P Global Luxury Index by about 21%, with its shares up roughly 8% from late-August lows. Paulsen argues this shift in relative performance suggests consumers may be tightening their budgets again, signaling that the U.S. economy is losing momentum and that future weakness could force the Fed to pivot back toward easing. But if rising energy prices continue to push overall inflation higher, or if corporate investment and consumer demand remain strong, policymakers may keep a hawkish stance. The historical track record of this indicator has also drawn market attention. According to Paulsen's analysis, the "Walmart recession signal" rose markedly before each of the past four recessions, and since 1990, similar shifts have appeared before the start of every Fed easing cycle.