US stocks edge higher as investors digest Powell's outlook for aggressive rate hikes
- US stocks rose modestly Tuesday after Wall Street's key indexes snapped win streaks in the previous session.
- St. Louis Fed President James Bullard reiterated its call for the fed funds rate to top 3% this year.
Stocks rose modestly Tuesday, winning back some ground lost in the previous session after US Federal Reserve Chair Jerome Powell said he's open to bigger rate hikes as the central bank looks to combat high inflation.
The Dow Jones Industrial Average rose after snapping a five-session winning streak on Monday. In Tuesday's session, Dow component Nike climbed after the athletic apparel maker's fiscal third-quarter earnings and sales jumped above expectations.
The S&P 500 and the Nasdaq Composite also rose after Monday's session broke four straight days of gains. Investors on Tuesday appeared to be digesting Powell's comments made Monday to the National Association for Business Economics that there is potential for a rate hike of 50 basis points and that "inflation is much too high."
Goldman Sachs said Tuesday it now expects the Fed to raise interest rates by 50 basis points at both the May and June meetings.
Here's where US indexes stood at 9:30 a.m. on Tuesday:
- S&P 500: 4,476.67, up 0.35%
- Dow Jones Industrial Average: 34,725.97, up 0.5% (172.98 points)
- Nasdaq Composite: 13,860.72, up 0.18%
St. Louis Federal Reserve President James Bullard in a Bloomberg interview on Tuesday reiterated his call for the federal funds rate to be jacked up above 3% this year as lower rates put upward pressure on inflation. Consumer price inflation hit a fresh 40-year high of 7.9% in February.
Market bets suggested investors expect a half-point rate increase could take place at the Fed's meeting in May. With investors pricing in more rate hikes, a selloff in the bond market continued and pushed the 10-year Treasury yield to a 2019 high of 2.359%. The 10-year yield later pared its gain, rising five basis points to 2.343%.
Alibaba stock soared after the Chinese e-commerce heavyweight announced its biggest-ever share buyback program of $25 billion.
JPMorgan's quant guru Marko Kolanovic slightly tempered his bullishness on stocks Monday, lowering his S&P 500 year-end price target to 4,900 from 5,050 in the face of geopolitical and macro risks.
Oil prices slipped. West Texas Intermediate crude shed 0.2% to $111.92 per barrel. Brent crude, the international benchmark, slipped 0.2% to $115.36.
Gold prices edged down 0.1% to $1,927.10 per ounce. Bitcoin gained 4.2% to $42,928.34