Stock futures traded sharply higher Tuesday as investors returned from a three-day weekend feeling a bit more optimistic after last week’s steep selloff.
Contracts linked to the Dow Jones Industrial Average rose 486 points, or 1.6%, to 30,355, S&P 500 futures rose 1.8% and Nasdaq futures gained 1.9%. The yield on the 10-year Treasury rose to 3.288% from 3.238% on Friday.
Stocks closed mostly higher on Friday after a brutal week. The Dow ended the week with a drop of 4.8% — its worst one-week percentage decline since Oct. 30, 2020. The blue-chip index has fallen for 11 of the past 12 weeks. The S&P 500 dropped 5.8% last week, its worst since late March 2020. The tech-heavy Nasdaq declined 4.8% last week and has fallen 10 of the past 11 weeks.
Markets in the U.S. were closed Monday for the observance of Juneteenth National Independence Day.
Lifting sentiment Tuesday were comments from President Joe Biden, who said a U.S. recession wasn’t “inevitable.” The president’s comments were made Monday following a talk he had with former Treasury Secretary Larry Summers, who feels there is a recession ahead.
“No, I don’t think it is,” Biden said about asked whether the U.S. was headed for a recession. “I was talking to Larry Summers this morning and there’s nothing inevitable about a recession.”
Appearances before Congress from Federal Reserve Chairman Jerome Powell will be closely watched by Wall Street this week. The Fed has been hiking rates in an effort to cool inflation that is running at 40-year highs. Some investors fear the Fed’s aggressive policy tightening will lead to a recession.
The central bank raised its benchmark interest rate by 0.75 percentage point last week and is expected to do so again at its next meeting in July.
St. Louis Fed President James Bullard played down fears of a severe recession, saying Monday the U.S. economy should continue to grow in the coming several months. But he warned that high inflation posed a serious risk to the U.S. economy.
Write to Joe Woelfel at firstname.lastname@example.org