Tuesday March 22nd


Stock futures rise after Dow snaps 5-day winning streak, traders weigh Powell inflation comments

U.S. stock market index futures rose Tuesday, as Wall Street looked to rebound from a down session, while traders weighed Federal Reserve Chair Jerome Powell’s latest rate hike comments. Futures on the Dow Jones Industrial Average rose about 180 points, or 0.5%. S&P 500 futures added 0.4% and Nasdaq 100 futures 0.2%. Wall Street was coming off a volatile session Monday, as Powell vowed to take “necessary steps” to curb inflation. The Dow on Monday snapped a five-day winning streak, while the S&P 500 and the Nasdaq Composite saw their first down session after four consecutive positive days. Less than a week after the Fed raised rates for the first time since 2018, Powell on Monday said “inflation is much too high” and added that rates could increase by a greater magnitude than previously forecast. “If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so,” said Powell on Monday to the National Association for Business Economics. One basis point equals 0.01%. Some market participants raised their expectations for rate hikes following Powell’s comments. Goldman Sachs on Monday upped its forecast to 50 basis point hikes at the May and June Fed meetings. “We think odds of a 50 bp rate hike are rising,” UBS chief U.S. economist Jonathan Pingle said in a note Monday. The benchmark 10-year U.S. Treasury yield on Tuesday rose to its highest level since 2019 at its highs of the session, above 2.35%. Bank stocks inched higher in early morning trading as interest rates rose. JPMorgan and Bank of America rose about 0.9% in the premarket. Nike shares moved up about 5% in the premarket after the retailer reported a beat on the top and bottom lines for its fiscal third quarter, buoyed by strong demand in North America. Procter & Gamble added about 1% in premarket trading as Truist upgraded the stock to a buy rating and said the company’s fundamentals are undervalued. Investors on Tuesday continued to watch the situation in Eastern Europe, with President Joe Biden saying Russian President Vladimir Putin’s back is “against the wall” as the war with Ukraine nears a stalemate. The three major averages are on pace to finish the month positive, even amid geopolitical risk and Fed tightening. “Stocks have done okay ... in recent sessions,” U.S Bank Wealth Management’s Lisa Erickson told “Squawk Box” on Tuesday. “It’s on the back of what’s going on fundamentally with the macro economy as well as with underlying company earnings.” “There has been some slowing, but, really, both of those factors have been quite resilient,” Erickson added. Shares in Asia-Pacific were mostly higher on Tuesday, as Hong Kong-listed shares of Alibaba soared after the firm announced an upsizing of its share repurchase program from $15 billion to $25 billion. By the Tuesday market close in Hong Kong, shares of Alibaba listed in the city were up 11.2%. Hong Kong’s broader Hang Seng index led gains among the region’s major markets as it climbed 3.15% to 21,889.28. The Nikkei 225 in Japan jumped 1.48% to close at 27,224.11 while the Topix index climbed 1.28% to 1,933.74. Mainland Chinese stocks closed mixed, as the Shanghai composite edged 0.19% higher to 3,259.86 while the Shenzhen component dipped 0.492% to 12,318.78. South Korea’s Kospi advanced 0.89% on the day to 2,710. Oil rose towards $117 a barrel on Tuesday, adding to a 7% surge the previous day, supported by supply risks from a potential European Union oil embargo on Russia and concern about attacks on Saudi oil facilities. European Union foreign ministers are split on whether to join the United States in banning Russian oil. Some countries, including Germany, say the bloc is too dependent on Russia’s fossil fuels to withstand such a step. “It is still not clear whether this will really happen,” wrote Carsten Fritsch of Commerzbank in a report, adding: “a decision of this kind requires unanimity.” Brent crude rose $1.32, or 1.1%, to $116.91 per barrel. U.S. West Texas Intermediate crude advanced 0.6% to $112.82. Both contracts had settled up more than 7% on Monday. Gold prices fell on Tuesday, tracking a retreat in crude oil prices, with pressure also coming from the U.S. Federal Reserve head’s hawkish approach to tackling inflation which lifted Treasury yields. Spot gold fell 0.4% $1,928.30 per ounce. U.S. gold futures dipped 0.1% to $1,928.00.