(Representational image: Reuters)
US stocks rose on Tuesday, as bank shares gained on growing bets of aggressive interest rate increases by the Federal Reserve and sportswear maker Nike climbed after upbeat quarterly results.
Nine of the 11 major S&P sectors were up in early trading with financials and consumer discretionary rising the most.
The S&P 500 banks index gained 3.4 percent, powered by a 5.2 percent rise in Wells Fargo. The benchmark 10-year Treasury yield rose to 2.36 percent, its highest level since mid-May 2019.
The odds of a 50-basis point rate hike at the Fed’s policy meeting in May rose to 72.2 percent after Chair Jerome Powell said on Monday the central bank must move “expeditiously” to combat inflation.
The Fed had last week raised interest rates by 25 bps, the first increase since late 2018. IRPR
“Now that the Fed has embarked on a hawkish stance, the market is accepting that because they are taking a serious stand to fight inflation,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“The market is reacting from perhaps what was an oversold market condition and we’ll see the market continue to do well in the very near-term in anticipation of first-quarter earnings.”
Nike shares advanced 5.5 percent to power the blue-chip Dow as it beat quarterly profit and revenue expectations, and said manufacturing issues pinching sales over the past six months were now behind it.
Megacap Apple Inc, Microsoft Corp, Amazon.com and Alphabet Inc gained between 0.5 percent and 1.1 percent to provide the biggest boost to the S&P 500 and the Nasdaq.
Meanwhile, the Kremlin said it would like ongoing talks between Moscow and Kyiv to be more “active and substantive”, as fighting between Russian and Ukrainian forces continued.
Rising uncertainty around the conflict and hawkish comments from Powell had led Wall Street’s main indexes to snap four sessions of gains on Monday.
At 09:57 a.m. ET, the Dow Jones Industrial Average was up 283.64 points, or 0.82 percent, at 34,836.63, the S&P 500 was up 27.96 points, or 0.63 percent, at 4,489.14, and the Nasdaq Composite was up 96.85 points, or 0.70 percent, at 13,935.31.
Tesla Inc added 0.6 percent as the electric-car maker geared up to deliver the first 30 Model Y cars made at its 5 billion euro ($ 5.5 billion) European plant.
Alibaba Group Holding jumped 10.5 percent after the Chinese e-commerce giant raised its share buyback program to a record $ 25 billion.
Advancing issues outnumbered decliners by a 2.47-to-1 ratio on the NYSE and a 3.18-to-1 ratio on the Nasdaq.
The S&P index recorded 35 new 52-week highs and no new lows, while the Nasdaq recorded 35 new highs and 22 new lows.
