US stock futures opened higher on Tuesday afternoon after rallying during regular trading days, as investors were reassured by Federal Reserve Chair Jerome Powell that the central bank was ready to use its policies to reduce inflation, which has been at multi-decade highs.
S&P 500 contracts have risen. The blue-chip index rose 2% to 4,088.85 on Tuesday’s regular trading day. Technology and growth stocks that hit last month have recovered some of their losses, with Nasdaq up 2.8%. And the cyclic small-cap Russell 2000 has also shaken off some of the recent losses, up 3.2%.
The market for rice on Tuesday came after a few strong reports on U.S. economic activity, which showed that both consumer spending and manufacturing output held firm. U.S. retail sales grew 0.9% in April, following a 1.4% monthly increase in March, which continues to drive consumer spending even after the fastest rate of consumer price growth since the 1980s. The latest print on U.S. industrial production also surpassed estimates by 1.1% last month, or more than doubled the expected growth.
The reports reflect ongoing resilience in some key elements of domestic activity and have helped temporarily allay concerns that the US economy could plunge into recession in the near future. And yet a strong economic background has given the Federal Reserve more room to raise interest rates and otherwise tighten monetary policy to bring down inflation without fear of deeply disrupting growth in other areas, such as the labor market. Fed Chair Powell acknowledged on Tuesday that “there may be some pain involved in restoring price stability,” adding that he believes the Fed will “be able to maintain a strong labor market.” Powell added that the Fed’s next policy-making meeting had “broad support” for raising interest rates by two to 50 basis points, reiterating its position since the Fed’s last meeting earlier this month.
“I don’t think he said anything that warned us … but let’s not forget where we are,” said Ryan Detrick, LPL Financial Chief Market Strategist. On Tuesday, Yahoo told Finance Live Note that the S&P 500 has come down this week for six consecutive weeks. “It’s not less than seven weeks in a row for 20 years, so we’ve had a lot of sales here. Then you come today and your industrial production has been pretty tough, your retail sales have been pretty tough. Not perfect, but we just think the negativity is worth it. Determined … It’s a little too much for us, and we think it could be an opportunity for long-term investors here. “
Nevertheless, high price concerns, Ukraine’s geopolitical concerns, and virus-related barriers in China remain a risk to equity. And while consumers are still spending in the face of rising inflation, this has come about because many companies are exploiting rising labor, raw material and transportation costs. Walmart (WMT) reported weaker-than-expected quarterly earnings on Tuesday and downgraded its profit outlook for the year, citing higher wages and running costs associated with supply chain disruptions.
Companies including Lowe’s (LOW), Target (TGT) and Cisco (CSCO) are set to report quarterly results on Wednesday.
6:10 pm ET Tuesday: Stock futures begin to fall again
Here is where the markets traded on Tuesday evening:
S&P 500 Futures (EN = F): +9.5 points (+ 0.23%) to 4,094.25
Dow Future (YM = F): +67 points (+ 0.21%) to 32,648.00
Nasdaq Future (NQ = F): +26 points (+ 0.21%) to 12,587.25
Emily McCormick is a reporter for Yahoo Finance. Follow him on Twitter.
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