U.S. stocks were off to a higher start Tuesday, finding support as efforts by Federal Reserve officials to soothe worries over a pickup in inflationary pressures appear to bear fruit and Treasury yields continued to edge lower.
What are major indexes doing?
On Monday, stocks rose, with technology shares leading the way. The Dow
DJIA,
What’s driving the market?
Rising inflation has been blamed for heightened stock-market volatility after data earlier this month showed the consumer-price index rose 4.2% year-over-year in April. The data prompted fears the Federal Reserve could move earlier than anticipated to begin pulling back on its monetary policy accommodation.
Since then, Fed officials, with few exceptions, have offered reassurances that they view near-term inflation pressures as transitory, signaling they would look through a near-term pickup in price pressures as the economy recovers from the coronavirus pandemic.
For example, the recent strong U.S. inflation readings are not the start of a steady move higher in consumer prices, Chicago Fed President Charles Evans said on Tuesday.
“As a chorus of Fed officials reiterated that the recent pickup in inflation would be transitory, investor fears were soothed about rising prices forcing higher interest rates,” said Lukman Otunuga, senior research analyst at FXTM, in a note. “U.S. equity bulls rejoiced on this development, encouraging buying in expensive growth stocks in sectors such as technology.”
Reassurances by Fed officials, however, haven’t fully erased investor worries, he said, which means markets will remain highly sensitive to changes in inflation expectations and remarks by policy makers, he said.
Bitcoin prices have stabilized, squelching another source of broader market volatility, after extending a tumble last week that took the price of the digital asset down 50% from its all-time high above $60,000 over the weekend.
The CoreLogic Case-Shiller U.S. home price index for March rose 13.3% on an annual basis in March.
A May consumer-confidence index reading is due at 10 a.m., while data an April new-home sales is slated for the same time.
Which companies are in focus?
What are other markets doing?