S&P 500 Futures Surge for Second Day in a Row as Volatility Hits Three-Month Low

U.S. stocks broadened their rally on Tuesday, as expected volatility declined to its lowest level in three months on strong earnings and promised tax reform.

The large-cap S&P 500 Index climbed 0.6% to 2,388.61, its second consecutive gain. The index has made a series of big moves over the past week, as investors jostled for position amid geopolitical instability and corporate earnings.

Nine of 11 sectors represented on the S&P 500 finished in positive territory. Materials stocks led the rally, climbing 1.6%. Shares of financial companies rose 0.9%, with banks leading the rally.

Discretionary stocks added 0.8%. Shares of energy companies also rose as crude oil prices stabilized.

Healthcare, information technology and industrials each added at least 0.5%.

On the other side of the fence, telecommunications services declined 0.3%. Utilities stocks, which are normally considered defensive plays, also finished in the red.

A measure of implied volatility known as the CBOE VIX settled at three-month lows Tuesday, as investors continue to price in a stronger bull market. Wall Street’s preferred volatility gauge settled down 0.7% at 10.76, which is around half its historical average.

Elsewhere on Wall Street, the Nasdaq Composite Index rose to new record highs, climbing 0.7% to 6,025.49. The Dow Jones Industrial Average added 1.1% to 20,996.12, after briefly trading at all-time highs.

Strong quarterly earnings from a bevy of Dow Jones companies and expectations of major U.S. tax cuts underpinned the market’s rally on Tuesday. U.S. President Donald Trump has ordered White House staff to prioritize tax cuts over deficit concerns in efforts to draft a plan that would slash corporate tax rates to 15%.

U.S. equities surged more than 1% on Monday after centrist Emmanuel Macron secured first place in the initial round of France’s presidential election. Latest polls show the pro-EU Macron is poised to beat far-right opponent Marine Le Pen in the second-round runoff scheduled for May 7.

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Sam Bourgi is a financial market analyst for economiccalendar.com. He has more than six years of progressive experience in economic and financial analysis, research consulting and sectoral analysis. As a published author in government, peer-reviewed, online and industry sources, he has developed a fundamental approach to the financial markets with a broad focus on stock indices, commodities and the technology sector. He earned his Bachelor’s Degree from the University of Windsor and Master’s degree from McMaster University.