Stock futures flat after markets recoup some losses

U.S. stock index futures were flat Tuesday night after major averages jumped during normal trading hours, trying to recoup some losses after weeks of selling.

Futures contracts related to the Dow Jones Industrial Average, S&P 500 and Nasdaq 100 were little changed.

During regular trade On Tuesday, the Dow jumped 641 points, or 2.15%. The S&P 500 added 2.45%, posting its best day since May 4. The jump comes after the benchmark fell 5.79% last week in its worst weekly performance since March 2020.

The Nasdaq Composite advanced 2.51% on Tuesday, after its tenth week of losses in the past 11 weeks.

Growing fears that the economy could tip into a recession have recently weighed on equities. The Federal Reserve last week hiked interest rates by three-quarters of a percentage point, the biggest rate hike by the central bank since 1994.

The move comes as the Fed attempts to quell inflation, which has hit a 40-year high.

“We don’t see a US or global recession in 22 or 23 in our base case, but the risks of a hard landing are clearly increasing,” UBS said in a note to clients on Tuesday.

“Even if the economy slips into a recession, it should be shallow given the strength of consumer and bank balance sheets,” the company added.

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Goldman Sachs, meanwhile, believes a recession is becoming increasingly likely for the US economy, saying the risks of a recession are “higher and greater”.

“The main reasons are that our baseline growth path is now lower and we are increasingly concerned that the Fed will feel compelled to react forcefully to high headline inflation and consumer inflation expectations if prices energy are still increasing, even if activity is slowing sharply,” the company said in a note to customers.

Tuesday’s rally raises the question of whether the stock is a short-term relief after weeks of selling, or a significant shift in sentiment. Tuesday’s strength was widespread. All 11 S&P sectors posted gains on the day, led by energy, climbing 5.8%.

“Our expectation is that market volatility will likely persist in the near term until the actions taken by the Federal Reserve thus far … and the actions it takes going forward have had time to work through the system,” Oppenheimer said Tuesday in a note to clients. .

Fed Chairman Jerome Powell will appear before Congress on Wednesday, kicking off two days of testimony. On the earnings front, KB Home will report results after the market closes on Wednesday.

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