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S&P 500 futures rise 1% because the market is ready to rebound from a brutal week

Published:

Traders on the ground of the NYSE, June 16, 2022.

Source: NYSE

Stock futures rose in overnight trading Monday following a brutal week as investors assessed a more aggressive Federal Reserve and rising probabilities of a recession.

Futures on the Dow Jones Industrial Average gained greater than 250 points. S&P 500 futures climbed 1.1% and Nasdaq 100 futures also rose 1.1%. U.S. stock markets were closed earlier Monday for Juneteenth.

The main averages just suffered their tenth losing week in 11 on fears that the central bank will hike rates aggressively to tame inflation at the chance of causing an economic downturn. The S&P 500 dropped 5.8% last week for its biggest weekly loss since March 2020, dipping deeper into bear market territory. The equity benchmark is now greater than 23% off its record high from early January.

The blue-chip Dow slid 4.8% last week, falling below 30,000 for the primary time since January 2021 last week. The tech-heavy Nasdaq Composite slipped 4.8% last week, down 33% from its record high.

“The recent drop in equity markets and inflection in investor attitudes make a bottoming thesis harder to make,” said Nationwide’s chief of investment research, Mark Hackett. “Investors are acting emotionally, but the basics are starting to follow the weakness within the technicals.”

Fed Chair Jerome Powell will testify before Congress Wednesday and Thursday. His appearance comes after a recent rate hike by three-quarters of a percentage point, the central bank’s biggest increase since 1994.

Investors will monitor incoming data, including existing home sales on Tuesday, to gauge the health of the economy. Recent data showing low consumer confidence, falling retail spending and a cooling housing market have fueled recession fears because the Fed battles inflation at 41-year highs.

Meanwhile, cryptocurrencies continued their roller-coaster ride. Bitcoin fell to a recent 2022 low of $17,601.58 over the weekend before climbing back above the $20,000 mark on Monday. The world’s largest cryptocurrency by market cap sits 70% below its all-time high hit in November.

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