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Stock futures rise to extend gains after Powell comments

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U.S. stock futures opened higher on Tuesday afternoon after rallying during the usual trading day, as investors were reassured by Federal Reserve Chairman Jerome Powell that the central bank was determined to use its policies to reduce inflation, which was still at its highest level in several decades.

Contracts on the S&P 500 rose slightly. The blue-chip index ended Tuesday’s regular trading day up 2% to settle at 4,088.85. Tech and growth stocks that had been battered over the past month recouped some losses, pushing the Nasdaq up 2.8%. And the cyclical small-cap Russell 2000 has also suffered some recent losses, climbing 3.2%.

Tuesday’s market moves came after some strong reports on U.S. economic activity, showing consumer spending and manufacturing output holding up strongly. U.S. retail sales rose at a 0.9% rate in April after a sharply revised upward 1.4% monthly increase in March, suggesting consumers continued to spend even as consumer price have climbed at the fastest pace since the 1980s. The latest print on US industrial production also beat estimates with a 1.1% jump last month, more than double the expected rise.

The reports reflected the continued resilience of some of the key components of domestic activity and helped, at least temporarily, ease concerns that the US economy could imminently collapse in a slowdown. And a still strong economic backdrop has given the Federal Reserve more leeway to raise interest rates and tighten monetary policy to bring down inflation without fear of deeply disrupting growth in other areas like the labor market. . Fed Chairman Powell acknowledged on Tuesday that while “there could be difficulties in restoring price stability”, he thought the Fed would be able to “support a strong labor market.” Powell also said there remained “broad support” for two more 50 basis point interest rate hikes at the Fed’s upcoming policy meetings, reiterating his view from the Fed’s last meeting. Fed at the beginning of the month.

“I don’t think he said anything that caught us off guard…but let’s not forget where we are,” Ryan Detrick, LPL’s chief financial markets strategist, told Yahoo Finance Live on Tuesday, noting that the S&P 500 has fallen for six consecutive weeks prior to this week. “There hasn’t been seven weeks of decline in a row for 20 years, so we’re terribly oversold here. Then you come in today and you have pretty strong industrial production, you have pretty strong retail sales Things are It’s not perfect, but we think so much about the negativity that’s factored in…it’s just a bit of a stretch for us, and we think it could very well be an opportunity for some of the investors to longer term here.

However, concerns over high prices, geopolitical concerns in Ukraine and virus-related disruptions in China remain risks for equities. And while consumers continued to spend amid rising inflation, this was because many businesses absorbed rising labor, raw material and transportation costs. . Walmart (WMT) tuesday announced weaker than expected quarterly results and cut its profit outlook for the year, citing higher wages and ongoing costs from supply chain disruptions.

Companies including Lowes (LOW), Target (TGT) and Cisco (CSCO) are set to release their quarterly results on Wednesday.

6:10 p.m. ET Tuesday: Stock futures resume falling

Here’s where the markets were trading Tuesday night:

  • S&P 500 Futures Contracts (FR=F): +9.5 points (+0.23%) to 4,094.25

  • Dow futures (JM=F): +67 points (+0.21%) to 32,648.00

  • Nasdaq futures contracts (NQ=F): +27 points (+0.21%) to 12,587.25

NEW YORK, NEW YORK - MAY 12: Traders work on the floor of the New York Stock Exchange (NYSE) on May 12, 2022 in New York City.  The Dow Jones Industrial Average fell in morning trade as investors continued to worry about inflation and other global issues.  (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – MAY 12: Traders work on the floor of the New York Stock Exchange (NYSE) on May 12, 2022 in New York City. The Dow Jones Industrial Average fell in morning trade as investors continued to worry about inflation and other global issues. (Photo by Spencer Platt/Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.

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