Stocks open higher after Powell hints at more aggressive rate hikes

U.S. stocks advanced Tuesday as investors continued to weigh hawkish remarks from Federal Reserve Chair Jerome Powell alongside the ongoing war in Ukraine.

The S&P 500 inched 0.4% higher to 4,479.19 as of 9:32 a.m. ET, and Dow Jones Industrial Average gained 150 points, or about 0.44%, to 34,705.81. The Nasdaq Composite ticked up 0.42% to 13,897.12. The moves follow 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.

“The choppiness is directly related to the comments,” Robert Schein, chief investment officer at Blanke Schein Wealth Management, told Yahoo Finance Live on Monday. “As soon as Federal Reserve Chairman Jerome Powell stated that exact commentary today, markets sold off.”

The Fed is “going to tighten until something breaks,” he added. “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.”

Russia’s war in Ukraine also continued to be front-and-center for investors. As of Monday, Ukraine 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 in Russia’s war in Ukraine.

U.S. crude oil prices soared more than 6% at session highs to top $112 per barrel, and Brent crude, the international standard, rose above $116 per barrel. Elsewhere in commodities markets, aluminum, palladium and wheat prices also gained on Monday.

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.

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

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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