Investors analyzed comments from Federal Reserve Chair Jerome Powell on the potential for increased interest rates as US markets reclaimed session highs. Short-term treasuries underperformed, increasing the yield curve's flattening.
As Apple, Tesla, and Nvidia Corp. recovered from a tech-led selloff on Monday, the S&P 500 closed at its highest level in more than a week, while the Nasdaq 100 gained more than 2%.
Treasury yields rose on Tuesday, with more policy-sensitive front-end tenors leading the way higher, reflecting expectations for a series of Fed rate hikes after Powell stated that the central bank will not hesitate to raise rates above neutral if necessary. No one should doubt the US central bank's determination to bring down the country's highest inflation in decades, according to Powell. He also mentioned how much the financial situation had tightened.
Earlier, hawk and FOMC voter James Bullard of the St. Louis Fed said he supports the central bank's strategy to raise interest rates in half-percentage-point increments, moves that have already been reflected in rates markets for the next three FOMC meetings.
The latest indication that consumers remained resilient in the face of inflation and higher rates boosted risk sentiment on Tuesday, with data showing that US retail sales climbed at a strong pace last month. Another survey revealed that factory output increased for the third month in a row in April.
The dollar continued to fall, losing ground versus all of its G-10 competitors save the yen, as European currencies led advances. The risk mood in Europe was lifted by data showing that the euro area economy grew faster than expected at the start of the year, despite headwinds from the early days of the Ukrainian conflict.
Stocks fell to session lows in early morning trade following reports that New York City has upped its COVID-19 alert level to high due to mounting pressure on the healthcare system, a step it hinted at on Monday.
Citigroup rose after a report revealed that Warren Buffett's Berkshire Hathaway had purchased a stake in the company. Walmart fell after lowering its earnings forecast owing to inflationary pressures. the Boeing company rose The black box for a China Eastern Airlines Corp. airplane indicates the plane performed an intentional nosedive, according to the Wall Street Journal.
Top officials reinforced their support for internet enterprises, according to a state television report, and JD.com inc., China's second-largest e-commerce operator, gained after revenue growth above expectations.
Meanwhile, three days of no community transmission were reported in Shanghai, a milestone that could prompt officials to begin unraveling a harsh ban. Flareups in other parts of China demonstrated how difficult it is to combat the omicron variant.
The current stablecoin volatility had no effect on cryptocurrencies, with bitcoin breaking beyond the $30,000 barrier. In New York, oil was hovering at $114 per barrel, following news that the US government will enable chevron corp. to negotiate its oil license with Venezuela.
