Stocks stage comeback day after Powell hints at more aggressive rate hikes

U.S. stocks rebounded to close firmly higher Tuesday as investors shrugged off hawkish remarks from Federal Reserve Chair Jerome Powell and continued to monitor the war in Ukraine.

[Click here to read what’s moving markets heading into Wednesday, March 23]

The S&P 500 rose 1.1% to 4,511.81, and Dow Jones Industrial Average jumped more than 250 points, or about 0.7%, to 34,807.86. The Nasdaq Composite was up nearly 2% to 14,108.82. The moves come on the back of a choppy session Monday that saw all three indexes cap last week’s winning streak to close lower after Powell signaled the central bank was prepared to act more aggressively to rein in inflation. Meanwhile, the 10-year U.S. Treasury climbed to yield 2.372%.

The Fed’s top leader reiterated in comments at the National Association for Business Economics Monday that policymakers will lean into higher short-term interest rates “as needed” to mitigate fast-rising price levels, with a goal of bringing inflation back down to an annual pace of about 2% while maintaining low unemployment.

“We just experienced the first rate increase over which it promises to be many, many more,” Research Affiliates CEO Chris Brightman told Yahoo Finance Live on Tuesday. “Whether there is a 50 bps or a 25 bps increase next is not the point so much as that we’re going to see continued tightening all through this year and likely into at least the first half of 2023 — and where it stops, nobody knows, including the Fed.”

The tightening could bring the yield curve, the relationship between short- and long-term interest rates of fixed-income securities issued by the U.S. Treasury, closer to inverting, Brightman pointed out. An inverted yield curve, when the short-term rates exceed the long-term rates, has been a signal of a pending economic recession in the past.

The Fed is “going to tighten until something breaks,” Robert Schein, chief investment officer at Blanke Schein Wealth Management, told Yahoo Finance Live on Monday. “That’s either breaking the back of inflation or growth is going to slow.”

Powell’s comments come just a week after investors met the central bank’s long-anticipated move to lift its benchmark Federal Funds Rate by 0.25% (to a target range of 0.25% to 0.50%) with temporary relief after the bump came in on par with what market participants had expected.

Despite providing some clarity to traders who for months have waited for the Fed to take steps forward on tightening monetary conditions, geopolitical turmoil in Eastern Europe and its economic toll continue to muddy the bank’s path ahead in fighting inflation. The Fed is also tasked with beginning quantitative tightening, or rolling assets off its nearly $9 trillion balance sheet.

The CPI print is “not going to look kind,” Allianz Investment Management’s head of ETFs Johan Grahn told Yahoo Finance Live. “That will be the indicator that the Fed is going to hang their hat on.”

Elsewhere in markets, Tesla was in the spotlight on Tuesday as shares of the electric vehicle giant soared amid the opening of its Berlin Gigafactory and delivery of the first 30 Model Y cars made in Europe.

Shares of Tesla were up 7.9% to $993.98 a piece, notching the biggest pop in three weeks.

Russia’s war in Ukraine also continued to be front-and-center for investors. Kyiv has refused to surrender its heavily-attacked port city of Mariupol to Russian forces as the civilian death toll climbed. Energy and commodity prices spiked amid the latest developments on the crisis.

Officials in both countries have sporadically signaled a possible negotiation but attempts at talks have so far proven unsuccessful. Ukrainian President Volodymyr Zelenskyy warned recently that if discussions with Vladimir Putin failed, it could mean the start of a third world war.

4:00 p.m. ET: All three main indexes stage comeback as Wall Street shrugs off Fed comments

Here’s how Wall Street closed out Tuesday’s trading session:

  • S&P 500 (^GSPC): +50.63 (+1.13%) to 4,511.81

  • Dow (^DJI): +254.87 (+0.74%) to 34,807.86

  • Nasdaq (^IXIC): +270.36 (+1.95%) to 14,108.82

  • Crude (CL=F): -$0.82 (-0.73%) to $111.30 a barrel

  • Gold (GC=F): -$8.20 (-0.42%) to $1,921.30 per ounce

  • 10-year Treasury (^TNX): +5.8 bps to yield 2.3730%

2:44 p.m. ET: Tesla gains on opening of Berlin Gigafactory, delivery of first Model Ys made in Europe

Tesla (TSLA) delivered the first 30 Model Y electric vehicles made at its newly-opened Berlin Gigafactory, its first plant in Europe.

Shares of Tesla were up 6.3% to $979.04 a piece as of 2:43 p.m. ET, notching the biggest pop in three weeks.

The factory is expected to eventually produce 500,000 vehicles annually and employ 12,000 workers. The first Model Ys rolling off the new location will be the performance variant, costing 63,990 euros ($70,500) with a 514 km (320 miles) range. New orders from the plant start delivery in April, Tesla said.

“We view the opening of Giga Berlin as one of the biggest strategic endeavors for Tesla over the last decade and should further vault its market share within Europe over the coming years as more consumers aggressively head down the EV path,” Wedbush analyst Dan Ives said. “We cannot stress the production importance of Giga Berlin to the overall success of Tesla’s footprint in Europe and globally.”

1:55 p.m. ET: Meme-stock favorite GameStop stages biggest rally of 2022

Shares of GameStop (GME) surged as much as 29%, the most intraday since Aug. 24 amid an uptick in mentions of the meme stock on retail-focused platforms such as Reddit and Stocktwits.

The video game retailer was on pace for its sixth straight gain, which would mark the longest winning streak since May, according to Bloomberg data. The stock is trading above its 50-day moving average — a level it has not closed above in nearly four months

Meanwhile, short interest in the stock has surpassed 20% of float this week for the first time since June 2021, according to data from S3 Partners.

1:49 p.m. ET: French oil and gas giant TotalEnergies to exit Russian market

French oil major TotalEnergies further self-sanctioned Russian crude and refined oil products, announcing it will terminate all long-term contracts with Russia as soon as possible, and not later than end of 2022.

“Given the Worsening situation in Ukraine and the existence of alternative sources for supplying Europe, TotalEnergies has unilaterally decided to no longer enter into or renew contracts to purchase Russian oil and petroleum products, in order to halt all its purchases of Russian oil and petroleum products as soon as possible and by the end of 2022 the latest,” the French multinational oil and gas company said Tuesday.

The move comes following pressure on TotalEnergies after it stayed hanging onto its Russian investments during a mass exodus of western oil majors after Russia’s invasion of Ukraine even though no sanctions have forced such divestments.

11:45 a.m. ET: Stocks rebound after closing lower in previous session

Here were the main moves in markets as of 11:45 a.m. ET:

  • S&P 500 (^GSPC): +43.05 (+0.96%) to 4,504.23

  • Dow (^DJI): +198.75 (+0.58%) to 34,751.74

  • Nasdaq (^IXIC): +255.43 (+1.85%) to 14,093.89

  • Crude (CL=F): -$2.47 (-2.20%) to $109.65 a barrel

  • Gold (GC=F): -$17.10 (-0.89%) to $1,912.40 per ounce

  • 10-year Treasury (^TNX): +6.4 bps to yield 2.3790%

10:45 a.m. ET: Japanese crypto exchange to list on Nasdaq in $1 billion SPAC merger

Japanese cryptocurrency exchange Coincheck Inc. announced it will go public in the United States by merging with blank-check firm Thunder Bridge Capital Partners IV Inc. in a deal valued at $1.25 billion.

The transaction is expected to result in proceeds of $237 million to the combined company from the cash held in the special-purpose acquisition company’s (SPAC) trust, assuming there are no redemptions.

Coincheck, based in Tokyo, is a marketplace for buying and selling cryptocurrencies and an exchange for digital assets such as non-fungible tokens. The company has about 1.5 million customers.

PARIS, FRANCE – FEBRUARY 16: In this photo illustration, Bitcoin course’s graph is seen on the Coincheck cryptocurrency exchange application on February 16, 2018 in Paris, France. Victims of one of the world’s largest cryptocurrency hacks are suing Coincheck, the Japanese company whose network was breached in a theft worth more than dollars 650 millions. Coincheck is a bitcoin wallet and exchange service headquartered in Tokyo, Japan, founded by Koichiro Wada and Yusuke Otsuka. It operates exchanges between bitcoin/ether and fiat currencies in Japan, and bitcoin transactions and storage in some countries worldwide. (Photo Illustration by Chesnot/Getty Images)

9:52 a.m. ET: Carnival Cruise sales miss on COVID-hit demand

Carnival Corp. (CCL) reported quarterly revenue that fell below Wall Street estimates as a rise in COVID-19 infections due to the Omicron variant put a dent in demand for cruise vacations during the period.

The cruise line operator said in the first quarter of 2022 it experienced an impact on bookings for its near-term sailings, including higher cancellation rates attributed to an increase in pre-travel positive test results as the Omicron wave took its course.

In December and January, several cases of infections were identified on ships owned by Carnival.

The company reported a net loss that narrowed to $1.89 billion, or $1.66 per share, in the quarter ended Feb. 28, from $1.97 billion, or $1.80 per share, a year earlier. Bloomberg consensus data showed analysts projected a loss of $1.23 per share.

9:30 a.m. ET: Stocks open higher as investors continue to weigh Fed inflation comments

Here’s how stocks opened at the start of Tuesday’s trading session:

  • S&P 500 (^GSPC): +15.12 (+0.34%) to 4,476.30

  • Dow (^DJI): +194.36 (+0.56%) to 34,747.35

  • Nasdaq (^IXIC): +22.26 (+0.16%) to 13,860.72

  • Crude (CL=F): +$0.32 (+0.29%) to $112.44 a barrel

  • Gold (GC=F): -$3.80 (-0.20%) to $1,925.70 per ounce

  • 10-year Treasury (^TNX): +5.7 bps to yield 2.3720%

7:23 a.m. ET: Bitcoin hits $42,000 as hedge fund Bridgewater plans foray into crypto

Bitcoin (BTC-USD) topped the $42,000 mark following news Ray Dalio’s Bridgewater Associates, the world’s biggest hedge fund, is set to invest in the digital asset.

The coin’s price jumped 3.7% to $42,888.33 Tuesday morning as of 7:20 a.m. ET.

Ethereum (ETH-USD) also gained on the news, rising 3.7% to $3,022.01 as of early Tuesday. The cryptocurrency advanced 16.5% in a week to $3,020 after its co-founder Vitalik Buterin appeared on the front cover of Time magazine.

Bridgewater’s plan to invest in bitcoin underscores the faith institutional finance has in a long-term upward trajectory for the cryptocurrency. The hedge fund is one of several professional investment management firms adding bitcoin to their investment portfolios.

Ray Dalio, Bridgewater's Co-Chairman and Co-Chief Investment Officer speaks during the Skybridge Capital SALT New York 2021 conference in New York City, U.S., September 15, 2021.  REUTERS/Brendan McDermid

Ray Dalio, Bridgewater’s Co-Chairman and Co-Chief Investment Officer speaks during the Skybridge Capital SALT New York 2021 conference in New York City, U.S., September 15, 2021. REUTERS/Brendan McDermid

7:00 a.m. ET: Contracts on S&P 500, Dow, and Nasdaq edge higher after Powell remarks

Here were the main moves in markets ahead of Tuesday’s open:

  • S&P 500 futures (ES=F): +16.00 points (+0.36%) to 4,468.25

  • Dow futures (YM=F): +169.00 points (+0.49%) to 34,605.00

  • Nasdaq futures (NQ=F): +46.25 point (+0.32%) to 14,416.75

  • Crude (CL=F): -$0.62(-0.55%) to $111.50 a barrel

  • Gold (GC=F): -$1.90 (-10.00%) to $1,927.60 per ounce

  • 10-year Treasury (^TNX): +0.00 bps to yield 2.315%

6:00 p.m. ET Monday: Stock futures tick slightly higher after indexes snap winning streak

Here’s where markets were trading heading into the overnight session Monday:

  • S&P 500 futures (ES=F): +4.00 points (+0.09%) to 4,456.25

  • Dow futures (YM=F): +47.00 points (+0.14%) to 34,483.00

  • Nasdaq futures (NQ=F): +16.75 point (+0.12%) to 14,387.25

  • Crude (CL=F): +$0.78 (+0.70%) to $112.90 a barrel

  • Gold (GC=F): +$6.80 (+0.35%) to $1,936.30 per ounce

  • 10-year Treasury (^TNX): +4.3 bps to yield 2.191%

NEW YORK, NEW YORK - MARCH 16: Traders work on the floor of the New York Stock Exchange (NYSE) on March 16, 2022 in New York City. The Dow started off the day in positive territory, extending yesterday's rally.  (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – MARCH 16: Traders work on the floor of the New York Stock Exchange (NYSE) on March 16, 2022 in New York City. The Dow started off the day in positive territory, extending yesterday’s rally. (Photo by Spencer Platt/Getty Images)

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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