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Stocks Rise Ahead of Powell Talk


U.S. stock indexes climbed Tuesday as investors snapped up beaten-down shares in technology, banking and other sectors.

The S&P 500 rose 1.4% in midday trading, while the Dow Jones Industrial Average added 0.7%. The tech-heavy Nasdaq Composite jumped 1.8%, rebounding after it fell 1.2% on Monday in a late-session selloff.

U.S. stocks have taken a beating in recent weeks as investors tried to assess the path for markets amid wide-ranging economic, geopolitical and Covid-19 concerns. Weighing most heavily on many investors’ minds is the outlook for the U.S. economy as the Federal Reserve lifts interest rates to combat inflation.  

On Tuesday, fresh data from the Commerce Department showed some signs of economic resilience, with U.S. shoppers increasing retail spending in April for the fourth straight month. That, as well as the reopening of some stores in Shanghai this week after a strict Covid-19 lockdown, provided some sources of optimism.

Later Tuesday, investors will hear from Fed Chairman

Jerome Powell

at The Wall Street Journal’s Future of Everything Festival. Market watchers are also continuing to assess the effects of the war in Ukraine, corporate earnings and the outlook for China’s economy. 

Many investors expect more choppiness ahead. The Nasdaq Composite, for example, has swung 1% or more in either direction in all but two of May’s 11 sessions.

“I think for better or worse, this is often a pattern that we see in bear markets,” said

Andrew Sheets,

chief cross-asset strategist at

Morgan Stanley.

“You do get these reversals that happen quite frequently…and I think that makes it hard to trade.” 

Morgan Stanley currently has a year-end price target of 3900 for the S&P 500, implying that the index still has further to fall. As of Monday, the S&P 500 was down 16% from its January high, putting it close—but not quite yet—in bear market territory. A bear market is defined as a drop of at least 20% from a recent high.

“We’re seeing the most aggressive tightening [of monetary policy] in decades against the backdrop of a very uncertain economic outlook and a squeeze on households,” said

Craig Erlam,

senior market analyst at Oanda. Last week’s U.S. inflation data, which showed that pricing pressures edged down just slightly in April, was worrisome, he said.

“It’s not just that [inflation] accelerated fast on the way up. The prospect of it decelerating slowly on the way down is a major concern,” he said.

Tech stocks were among the winners in Tuesday trading. Chip-maker

Nvidia

jumped 4.9%,

Tesla

added 4.1%, and

Apple

gained 1.6%.

Shares of

Citigroup

rallied 7.7% after a securities filing showed

Warren Buffett’s Berkshire Hathaway Inc.

bought around $3 billion worth of shares in the bank.

Twitter

stock slipped 0.1% to around $37.35 a share even after Tesla Chief Executive

Elon Musk

said his $44 billion bid for the social-media company can’t move forward until the company is clearer about how many of its accounts are fake. Twitter has now wiped out all the gains it notched after Mr. Musk disclosed a stake in the company in April and is trading well below his deal that values the company at $54.20 a share. If the stock finishes lower Tuesday, it would mark the eighth consecutive decline for Twitter. 

Walmart

slumped 9.9% after the retail giant reported that earnings fell sharply from the same period last year, hurt by higher supply-chain and labor costs.

Home Depot

shares were little changed after the home-improvement retailer boosted its outlook for the year and said shoppers were spending more per shopping trip.

Traders worked on the floor of the New York Stock Exchange on Monday.



Photo:

justin lane/Shutterstock

In the bond market, the yield on the benchmark U.S. 10-year Treasury note rose to 2.970% from 2.877% Monday, on pace to reverse a downward stretch for yields. As of Monday, the yield on the 10-year note had fallen for five of the past six trading days.

The price of bitcoin stabilized, recently trading at around…



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