Stock Market Today: Stocks higher, Treasury yields retreat as global markets settle

U.S. equity futures bumped higher Tuesday, building on yesterday's gains, as Treasury yields retreated and risk markets around the world settled amid dovish rate signals from the Federal Reserve and overnight moves by Israel to secure its border with Gaza. 

The Israeli Defense Force has launched a series of air strikes on Gaza, from land and by sea,  in what it has described a 'complete siege' following following the surprise weekend attack from Hamas militants. 

Around 300,000 troops have been called into action, the government said, with more air and ground strikes planned over the coming days. Hamas, however, has threatened to execute some or all of the estimated 150 hostages its holding in the territory should Israeli troops cross the southern border. 

The intensity of the fighting, as well as the potential for the conflict to draw in regional powers such as Saudi Arabia and Iran, continues to fuel safe-haven investment flows, particularly in U.S. Treasury bonds, where benchmark 10-year yields are set for the biggest single-session decline since late March. 

Benchmark 2-year notes are tumbling as well, and were last seen trading at 4.984%, with 10-year paper at 4.648%, following both defensive overnight trading and comments from Dallas Fed President Lorie Logan, who told a National Association for Business Economics event that "if long-term interest rates remain elevated because of higher term premiums, there may be less need to raise the fed funds rate." 

Fixed income traders will now likely focus on minutes of the Fed's September policy meeting, which are published on Wednesday, and the Commerce Department's key reading of September inflation, slated for 8:30 am Eastern time on Thursday. 

Investors, however, are placing firm bets on the Fed having completed its rate hiking cycle, with the odds of a quarter point hike over the next six meetings no greater than 25.3%, according to the CME Group's Fed Watch.

That could provide some support for stocks heading into the unofficial start of the third quarter earnings season this week, with updates from PepsiCo  (PEP) - Get Free Report today, Delta Airlines  (DAL) - Get Free Report tomorrow and JPMorgan  (JPM) - Get Free Report, Citigroup  (C) - Get Free Report and Wells Fargo  (WFC) - Get Free Report on Friday. 

Collective S&P 500 earnings for the three months ending in September are expected to grow 1.3% from last year to a share-weighted $464.4 billion, according to Refinitiv data, representing the strongest quarterly gain of the year.

Stocks on Wall Street look set for only modest gains, however, given the global investor concern for the deadly fighting in Israel and the ongoing political chaos in Washington, where House Republicans will attempt to elect a new speaker following the historic ouster of Kevin McCarthy last week.

Futures contracts tied to the S&P 500, which finished the day up 0.63% on Monday, are indicating a 9 point opening bell gain while those tied to the Dow Jones Industrial Average are suggesting a 76 point move to the upside. The pullback in Treasury yields is helping the tech-focused Nasdaq to a 43 point bump.

In overnight trading, the 'risk-on' move in global markets boosted Europe's Stoxx 600 by around 1.4%, putting the regional benchmark on pace for its biggest one-day advance since December of last year. 

In Asia, the region-wide MSCI ex-Japan benchmark jumped 0.83% into the close of trading while a modestly weaker yen helped the Nikkei 225 return to trading with a 2.43% surge following Monday's 'Sports Day' holiday celebrations.

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