US stock futures opened higher on Tuesday afternoon after rising during the normal trading day, as investors received reassurances from Federal Reserve Chair Jerome Powell that the central bank is intent on using its policies to bring down inflation that is still running at multi-decade highs.
Contracts in the S&P 500 rose. The blue-chip stock index ended Tuesday’s regular trading day 2% higher to settle at 4,088.85. Technology and growth stocks that have been battered over the past month regained some losses, sending the Nasdaq up 2.8%. Small cap cyclical Russell 2000 also pared some recent losses, jumping 3.2%.
Tuesday’s market moves came after two strong reports on US economic activity, indicating that both consumer spending and manufacturing production were firmly in line. US retail sales grew 0.9% in April after an upwardly revised 1.4% monthly rise in March, indicating consumers continued to spend even as consumer prices rose It jumped at the fastest rate since the 80s. The latest data on industrial production in the US also beat estimates with a 1.1% jump last month, or more than double the expected rise.
The reports reflected continued resilience in some key components of domestic activity and at least temporarily helped allay fears that the US economy may be imminently collapsing into deflation. The still-strong economic backdrop has given the Federal Reserve more room to raise interest rates and tighten monetary policy to cut inflation without fear of severely disrupting growth in other areas such as the labor market. Fed Chairman Powell acknowledged that time on Tuesday “There may be some pain involved in restoring price stability,” he said. He believed that the Fed would be able to “maintain a strong labor market”. Powell also said there was still “broad support” for two additional 50 basis point rate hikes at the Fed’s upcoming policy setting meetings, echoing his view from the Fed’s last meeting earlier this month.
“I don’t think he said anything that shocked us…but let’s not forget where we are,” Ryan Dettrick, chief strategist at LPL Financial Market, said. Yahoo Finance Live said on Tuesday, Noting that the S&P 500 had fallen for six consecutive weeks before this week. “It hasn’t gone down seven straight weeks for 20 years, so we’re horribly oversold here. Then you come today and you have very strong industrial production, very strong retail sales. Things aren’t ‘not perfect, but we think a lot about the negative that’s being priced…’ It’s just a slight increase for us, and we think this could be a good opportunity for some long-term investors here.”
However, concerns about higher prices, geopolitical concerns in Ukraine and virus-related turmoil in China still pose risks to stocks. And although consumers were still spending amid rising inflation, it was because many businesses were absorbing rising labor, raw materials and transportation costs. Walmart (WMT) Tuesday Reported weaker-than-expected quarterly profit It lowered its profit forecast for the year, citing higher wages and ongoing costs related to supply chain disruptions.
6:10PM ET Tuesday: Stock futures resume lower
Here’s where the markets are trading on Tuesday night:
S&P 500 futures contracts (ES = F.): +9.5 points (+0.23%) to 4094.25
Dow futures contractsYM = F.): +67 points (+0.21%) to 32648.00
Nasdaq futures contractsNQ = F.): +27 points (+0.21%) up to 12587.25
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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