Tech finds its footing, but Wall Street's rally lacks conviction

U.S. stocks finished Tuesday with modest gains as investors cautiously returned to technology shares ahead of Wednesday's closely watched inflation report and Nvidia's earnings, while lower oil prices and Treasury yields offered some relief.

The advance, however, was hardly convincing. Although most sectors ended higher, the S&P 500 rose just 0.32%. Technology led the advance, but pared much stronger early-session gains, closing up 1% after rising as much as 1.5% during the session. Even so, the sector finally snapped a seven-day losing streak, its longest run of declines since September 2022.

Energy was the clear laggard, dropping 1.7% as U.S. crude futures tumbled over 4%.

Beneath the surface, chipmakers, biotech stocks and gold and silver miners were among the day's standout performers, while regional banks edged lower.

Meanwhile, materials and financials quietly notched fresh record closing highs.

The focus now shifts to Wednesday's July PCE price index report, the Federal Reserve's preferred inflation gauge. Economists expect headline prices to rise 0.1% month-over-month, with annual inflation easing to 3.6% from 3.7%. Core PCE is seen increasing 0.2% on the month, while the annual core reading is expected to hold steady at 3.3%.

Investors are also awaiting Nvidia's quarterly results after the bell. Any signs of slowing growth could reignite concerns about lofty valuations and test confidence in the durability of the AI-driven rally. While the AI chip giant remains up 14.2% for the year, Tuesday's close of $213.05 leaves the stock little changed from levels seen about four months ago.