Stock futures jump as market looks set to bounce back from tough week

Traders on the floor of the New York Stock Exchange, June 16, 2022.

Source: NYSE

Stock futures rose in early morning trading on Tuesday after a tough week as investors assessed the more aggressive Federal Reserve and increased chances of a recession.

Futures on the Dow Jones Industrial Average jumped 394 points, or 1.32%. S&P 500 futures are up 1.58% and Nasdaq 100 futures are also up 1.71%. US stock markets were closed earlier on Monday in June.

The major averages just suffered their 10th week of losses in 11 on fears the central bank will raise interest rates aggressively to tame inflation on the back of the risk of triggering an economic deflation. The S&P 500 fell 5.8% last week, posting its biggest weekly loss since March 2020, falling deeper into bear market territory. The stock index is now down more than 23% from its highest level since early January.

The Dow Jones Industrial Average fell 4.8% last week, falling below 30,000 for the first time since January 2021 last week. The Nasdaq’s tech-heavy composite index fell 4.8% last week, down 33% from its high.

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“The recent decline in stock markets and the upheaval in investor attitudes makes it difficult to make the final thesis even more difficult,” said Mark Hackett, head of investment research at Nationwide. “Investors are acting emotional, but the fundamentals are starting to track weakness in technical indicators.”

Federal Reserve Chairman Jerome Powell will testify before Congress on Wednesday and Thursday. His appearance comes after the recent interest rate hike by three-quarters of a percentage point, the largest central bank increase since 1994.

Investors will be watching incoming data, including existing home sales on Tuesday, to gauge the health of the economy. Recent data showing low consumer confidence, declining retail spending and a frozen housing market have fueled recession fears as the Federal Reserve battles inflation at 41-year highs.

Meanwhile, cryptocurrency has continued its fast track. Bitcoin dropped to a new 2022 low of $1,701.58 over the weekend before rising again above the $20,000 mark on Monday. The world’s largest cryptocurrency by market capitalization is 70% below its all-time high in November.

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