Dow Futures Rise 220 Pts; Fed Speakers in Focus

By Peter Nurse — U.S. stocks are seen opening higher Tuesday, with investors looking to take advantage of relatively cheap valuations after recent hefty losses on fears that elevated inflation levels will lead to aggressive Federal Reserve rate hikes.

At 07:00 AM ET (1100 GMT), the Dow Futures contract was up 220 points, or 0.7%, S&P 500 Futures traded 32 points, or 0.8%, higher and Nasdaq 100 Futures climbed 150 points, or 1.2%.

The major Wall Street indices closed sharply lower Monday as inflation fears and the associated likely aggressive monetary policy tightening continued to hit markets on all sides.

The blue-chip Dow Jones Industrial Average dropped over 650 points, or 2%, the broad-based S&P 500 fell 3.2% to its weakest point since March last year, while the Nasdaq Composite lost 4.3%, with the world’s largest technology companies shedding over $1 trillion in value in just three trading sessions.

Helping the tone Tuesday were comments from Atlanta Federal Reserve President Raphael Bostic late Monday, who downplayed the idea of the U.S. central bank increasing interest rates by larger amounts than the 50 basis points it hiked last week.

“I would say that (a 75-basis-point rate hike) is a low probability outcome given what I expect will happen in the economy over the next three to four months,” Bostic told Reuters during an interview.

The Fed speak continues Tuesday, with New York Fed President John Williams, Bostic again, Governor Christopher Waller, Minneapolis’ Neel Kashkari and Cleveland’s Loretta Mester all due to talk, and their comments will be studied carefully ahead of Wednesday’s consumer price inflation report, which is expected to show that annual price rises slowed slightly in April.

In the corporate sector, Peloton Interactive (NASDAQ:PTON) is set to report earnings before the bell, while the likes of Coinbase (NASDAQ:COIN), Roblox (NYSE:RBLX), RealReal (NASDAQ:REAL) and Allbirds (NASDAQ:BIRD) are expected to report earnings after the market closes.

Additionally, Novavax (NASDAQ:NVAX) stock is seen trading over 20% lower premarket after the biotech company reported its first profitable quarter, but still disappointed as its COVID vaccine sales came in below expectations.

AMC Entertainment (NYSE:AMC) stock rose 3.8% premarket after the movie theater chain’s first-quarter results beat estimates as moviegoers flocked to the big screen following the pandemic-led hiatus.

Oil prices fell Tuesday on concerns of weakened demand from China, the world’s top importer, while the European Union struggles to agree on a common stance on Russian oil imports.

Chinese Premier Li Keqiang warned Tuesday of a “complicated and grave” employment situation as Beijing and Shanghai tightened curbs in a bid to contain COVID outbreaks.

The European Commission proposed a deal last week to eventually ban Russian oil, but the proposal requires approval from all 27 EU countries. This has proved difficult to achieve as the countries most dependent on Russian energy, like landlocked Hungary, Slovakia, and the Czech Republic, have sought exemptions.

The industry body American Petroleum Institute is due to report data on weekly U.S. crude inventories later in the session.

By 07:00 AM ET, U.S. crude futures traded 1.9% lower at $101.17 a barrel, while the Brent contract fell 1.9% to $103.92. Both benchmarks posted their biggest daily percentage fall since March on Monday, dropping by 5% to 6%.

Additionally, gold futures traded 0.1% lower at $1,857.52/oz, while EUR/USD traded 0.1% lower at 1.0546.

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