4.05pm: Tech stocks power a broad-based rally for equities
US stocks finished the trading session sharply higher as investors weighed Federal Reserve Chair Jerome Powell’s most-recent rate hike comments as well as the continuing conflict in Ukraine.
At the close, the Dow gained 255 points to 34,808, while the S&P 500 added 51 points at 4,512 and the tech-heavy Nasdaq climbed 270 points to 14,109.
Notable movers included shares of Nike Inc (NYSE:NKE), which rose nearly 3% after the apparel retailer reported better-than-expected 3Q financial results on strong demand in North America.
12:00pm: US equities higher midday
US stocks were higher midday Tuesday as investors and traders digested Federal Reserve Chair Jerome Powell’s latest rate hike comments.
Stocks are coming off a volatile session Monday after Powell said “inflation is much too high” and vowed to take “necessary steps” to curb inflation. The comments came less than a week after the Fed raised rates for the first time since 2018.
Bank stocks rose Tuesday along with interest rates. Financials comprised the top-performing S&P 500 sector. JPMorgan gained more than 2%, and Bank of America (NYSE:BAC) rose around 3%.
As of noon, the Dow Jones Industrial Average was up 238 points, or 0.69%, to 34,773. The S&P 500 increased 45 points, or 1.02%, to 4,507.
And the tech-heavy Nasdaq rose 261 points, or 1.89%, to 14,100.
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9.44am: US shares start higher
Wall Street stocks started higher on Tuesday, shaking off the falls of Monday after hawkish comments from Fed chair Jerome Powell on interest rates.
In New York, the Dow Jones Industrial Average added around 155 points at 34,708. The S&P 500 gained around 16 at 4,477.
The tech-heavy Nasdaq Composite index added around 59 points to stand at 13,898.
Shares in Nike were on the up an top of the S&P pile as the sports shoe and clothes posted third-quarter results, which beat analysts’ estimates due to robust demand for its products across North America.
And for its current fiscal year, the firm reiterated expectations for sales to grow mid-single-digits from the year-earlier period. Nike shares added 5.8% in New York to US$137.60.
Meanwhile, traders today continue to monitor the ongoing war in Ukraine, global inflationary pressures and supply chain issues as well as corporate earnings.
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US stocks are expected to open higher on Tuesday on expectations that US interest rates will rise quickly after Federal Reserve Chairman Jerome Powell talked tough on Monday that aggressive increases may be needed to fight inflationary pressures.
Rising oil prices and the likelihood that the war in Ukraine will lead to higher commodity prices and supply chain constraints are sparking fears of spiraling inflation across the globe, keeping markets jittery.
Futures for the Dow Jones Industrial Average gained 0.5%, while those for the broader S&P 500 index rose 0.4%, and contracts for the tech-heavy Nasdaq-100 were up 0.5%.
“Jerome Powell wants to see the US interest rates rise faster. At a speech titled ‘Restoring Price Stability’ yesterday, Powell told the National Association for Business Economics that there could be a 50-bp hike in May, and at subsequent sessions, if the Federal Reserve (Fed) officials conclude that it’s more appropriate to move faster,” Ipek Ozkardeskaya, senior analyst at Swissquote said.
“And it will probably be more appropriate for the Fed to move faster, as inflation will certainly continue spiking toward fresh multi-decade highs given that the latest numbers don’t even factor in the war-led surge in oil and commodity prices, and the Covid-led restriction measures that add an additional pressure on the global supply chain crisis.," she added.
Last week, the Federal Reserve raised interest rates by a quarter-point, its first increase since 2018. Now, rapid rate hikes are expected after Powell noted in a speech that inflation is “much too high” while the “labor market is very strong.” His remarks led to a jump in bond yields.
“Powell is now playing with an open hand, as he doesn’t necessarily rock the boat with surprise hawkish moves which would get investors to dampen their assets faster than necessary. And a panicked market is not the ideal environment to hike rates,” Ozkardeskaya concluded.
Among commodities, benchmark oil prices remain elevated, well above $100 a barrel but off a high of over $130, having risen from around $90 a barrel before the war broke.
Possible EU sanctions on Russian oil and an attack on Saudi oil facilities on Sunday are propping up oil prices. The news flow on the war in Ukraine and on the possibility of an oil embargo is likely to affect sentiment, keeping in focus wider concerns about global inflation.
Contact the author at jon.hopkins@proactiveinvestors.com