The stock market bounced back on Tuesday as Wall Street bought the dip in Bitcoin and other riskier assets.The Dow Jones Industrial Average rose 185 points, or 0.4%. The S&P 500 was up 0.3%. The Nasdaq Composite was up 0.6%.Traders have been paying close attention to the price of Bitcoin, which rebounded sharply to move back above the $90,000 level on Tuesday. ...

All three of the stocks rallied more than 5% on Monday as investors piled into Bitcoin and other risk-on assets. ...

Core Viewpoint - The Federal Reserve's decision to lower interest rates by 0.25 percentage points has positively influenced market sentiment, leading to a decrease in the cost of credit default swaps for euro-denominated debt [1] Group 1: Market Impact - The Fed's rate cut is driving an increase in global investment appetite for risk assets [1] - The European cross credit default swap index, which measures the credit risk of euro high-yield bonds, fell by 3 basis points to 248 basis points [1]

Group 1 - The market currently reflects less than a 50% chance of a rate cut in September, with expectations of no more than two cuts in the next three meetings [1] - Morgan Asset Management still anticipates a policy easing from the Federal Reserve this year, likely in December, contingent on significant deterioration in the labor market [1] - The Federal Reserve's July meeting marked the first instance in over 30 years with two dissenters, indicating a desire to be seen as effective rather than overly hawkish or dovish [1] Group 2 - Despite recent increases in inflation rates, the impact of tariffs on consumer prices has been limited, with the Fed viewing tariff-driven price increases as a level change rather than a persistent inflation driver [2] - The bond market's slight increase in yields reflects the pricing effect of policy easing, while the dollar has strengthened, suggesting a more hawkish interpretation of recent Fed meetings [2] - Morgan Asset Management believes that tariffs will drag on economic growth and contribute to rising inflation throughout the year, but fiscal policy's delayed effects will boost growth by 2026 [3] Group 3 - The narrow path to avoid recession and long-term inflation pressures is seen as favorable for risk assets, although it is premature to declare the removal of policy risks [3] - Morgan Asset Management prefers quality in stock and fixed-income portfolios and is looking for relative value opportunities outside the U.S., including Europe, Japan, and emerging markets [3]

Core Insights - A record number of investors are returning to risk assets driven by optimism about economic growth and strong corporate profits [1] Group 1: Investor Sentiment - The risk level in investor portfolios has reached the highest level since 2001 over a three-month period [1] - There has been a significant increase in allocations to U.S. and European stocks, as well as technology stocks [1] Group 2: Allocation Changes - The July survey indicates the largest increase in allocations to U.S. stocks since December of the previous year [1] - Allocations to technology stocks have seen the largest three-month increase since 2009 [1] - The overweight position in Eurozone stocks has reached its highest level in four years [1]

Group 1 - Moody's downgrade of the US credit rating led to a 1% drop in the S&P 500 index, but retail traders began record buying of US stocks shortly after [1] - Retail investors net purchased $4.1 billion in US stocks by noon on Monday, marking the highest level for that time of day [1] - The S&P 500 index initially fell nearly 1.1% but rebounded to a flat position by the afternoon, with retail trading accounting for 36% of the volume, the highest since April [1][3] Group 2 - Retail investors have learned from past experiences and are now committed to seizing opportunities in the market, as indicated by their significant buying activity [3] - Wall Street strategists largely ignored Moody's downgrade, advising clients to continue buying stocks, with some suggesting that the recent drop presents a buying opportunity [3] - Clough Capital Partners' CEO noted that retail investors are making intuitive decisions to allocate funds where they can achieve attractive risk-adjusted returns [4] Group 3 - On Monday, retail investors bought $2.5 billion in individual stocks and $1.5 billion in ETFs, with significant inflows into Tesla and Palantir [4] - Retail investors are also investing in Bitcoin ETFs while remaining net sellers of Nvidia [4]