Stocks rise ahead of Powell Talk


U.S. stock indexes climbed on Tuesday as investors snapped up battered stocks in technology, banking and other sectors.

The S&P 500 rose 1.4% in morning trade, while the Dow Jones Industrial Average added 0.9%. The tech-heavy Nasdaq Composite jumped 1.7%, rebounding from falling 1.2% on Monday in a late-session selloff.

US equities have taken a beating in recent weeks as investors tried to assess the way of the markets amid wide-ranging economic, geopolitical and Covid-19 concerns. What weighs most heavily on the minds of many investors is the outlook for the US economy as the Federal Reserve raises interest rates to fight inflation.

On Tuesday, new data from the Commerce Department showed signs of economic resilience, with U.S. shoppers increasing retail spending in April for the fourth consecutive month. That, along with the reopening of some stores in Shanghai this week after a strict Covid-19 lockdown, provided some sources of optimism.

Later Tuesday, investors will hear from Fed Chairman Jerome Powell at the Wall Street Journal’s Future of Everything festival. Market watchers also continue to assess the effects of the war in Ukraine, as well as the outlook for the Chinese economy.

Many investors expect more instability to come. The Nasdaq Composite, for example, swung 1% or more in either direction in all but two May 11 sessions.

“I think for better or for worse, that’s often a trend we see in bear markets,” said Andrew Sheets, chief multi-asset strategist at Morgan Stanley..

“You get these reversals that happen quite frequently…and I think that makes it difficult to trade.”

Morgan Stanley currently has a year-end price target of 3900 for the S&P 500, implying that the index needs to drop further. On Monday, the S&P 500 was down 16% from its January peak, bringing it closer, but not quite yet, to a bear market. A bear market is defined as a decline of at least 20% from a recent high.

“We are seeing the most aggressive tightening [of monetary policy] for decades amid a highly uncertain economic outlook and pressure on households,” said Craig Erlam, senior market analyst at Oanda. U.S. inflation data last week, which showed price pressures eased only slightly in April, was worrisome, he said.

” There is not just that [inflation] accelerated rapidly on the way up. The prospect of it slowly decelerating on the way down is a major concern,” he said.

Tech stocks were among the winners in Tuesday’s session. Chipmaker Nvidia jumped 4.4%, Tesla added 2.8% and Apple gained 1.8%.

Citigroup shares rose 6.9% after a securities filing showed Warren Buffett’s Berkshire Hathaway Inc.

purchased approximately $3 billion worth of bank stock.

Twitter stock soared 0.5% to around $37.55 per share, even after Tesla Chief Executive Elon Musk said his $44 billion bid for the social media company won’t couldn’t move forward until the company was clearer about how many of its accounts are fake. Twitter has now wiped out any gains it made after Mr Musk disclosed a stake in the company in April and is trading well below its deal which values ​​the company at $54.20 per share. If the stock ends lower on Tuesday, it would mark the eighth consecutive decline for Twitter.

Walmart fell 8.2% after the retail giant said its profits fell sharply from the same period last year, hurt by rising supply chain costs and Workforce. Home Depot shares rose 0.1% after the home improvement retailer improved its outlook for the year and said shoppers were spending more per shopping.

Traders worked on the floor of the New York Stock Exchange on Monday.


Photo:

Justin Lane/Shutterstock

In the bond market, the yield on the benchmark 10-year U.S. Treasury rose to 2.964% from 2.877% on Monday, on track to reverse a downward trend in yields. On Monday, the yield on the 10-year note had fallen for five of the past six trading days.

Bitcoin price has stabilized, recently trading around $30,342, up 1.5% from its level at 5 p.m. ET on Monday.

The relative calm in the markets on Tuesday sent the WSJ Dollar Index down 0.6%. The index, which measures the greenback against a basket of 16 other currencies, has been one of the few to post consistent gains this year in a market that has given investors few other places to hide. Even with its decline, the safe-haven asset still sits near its highest level since March 2020.

Brent crude oil futures, the international energy benchmark, rose 0.9% to $115.29 a barrel.

In Europe, the pan-continental Stoxx Europe 600 index rose 1.2%, on track to extend its winning streak to three days. Gains in the region were broad based, with banks, transportation companies and energy producers rising.

In Asia, Hong Kong’s Hang Seng jumped 3.3%, posting its third consecutive gain. Japan’s Nikkei 225 added 0.4%, also extending its winning streak to three sessions. The Shanghai Composite gained 0.6% after falling on Monday.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8


Wj

Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.
Back to top button