U.S. Stocks May Extend Recovery From Yesterday’s Early Sell-Off

Stocks may move to the upside in early trading on Tuesday, extending the recovery from the sell-off seen early in the previous session. The major index futures are currently pointing to a higher open for the markets, with the S&P 500 futures up by 10 points.

The markets may continue to benefit from bargain hunting, which helped stocks rebound from a rocky start to the New Year.

The tech-heavy Nasdaq showed a notable turnaround during trading on Monday after hitting its lowest intraday level in almost three months.

A decrease in Treasury yields may also contribute to initial strength on Wall Street, with the ten-year yield continuing to give back ground after reaching its highest intraday level since January of 2020.

Early trading activity may be somewhat subdued, however, as traders keep an eye on the Senate Banking Committee’s hearing on Federal Reserve Chair Jerome Powell’s nomination for another term.

In prepared remarks, Powell highlighted elevated inflation as a result of supply chain issues and said the Fed would use all of its tools to prevent higher inflation from becoming entrenched.

“We can begin to see that the post-pandemic economy is likely to be different in some respects,” Powell said. “The pursuit of our goals will need to take these differences into account.”

He added, “To that end, monetary policy must take a broad and forward-looking view, keeping pace with an ever-evolving economy.”

The question-and-answer portion of the hearing is likely to attract attention, although Powell is unlikely to make definitive statements about the outlook for monetary policy.

Following an early sell-off, stocks showed a notable rebound over the course of the trading session on Monday. The major averages climbed well off their worst levels of the day, with the Nasdaq reaching positive territory.

The Nasdaq tumbled by as much as 2.7 percent in early trading but ended the day up 6.93 points or 0.1 percent at 14,942.83. Meanwhile, the S&P 500 edged down 6.74 points or 0.1 percent at 4,670.29 and the Dow fell 162.79 points or 0.5 percent at 36,068.87.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan’s Nikkei 225 Index slid by 0.9 percent, while China’s Shanghai Composite Index declined by 0.7 percent.

Meanwhile, the major European markets have shown a notable rebound following recent weakness. While the U.K.’s FTSE 100 Index has risen by 0.6 percent, the French CAC 40 Index is up by 1 percent and the German DAX Index is up by 1.1 percent.

In commodities trading, crude oil futures are jumping $0.91 to $79.14 a barrel after sliding $0.67 to $78.23 a barrel on Monday. Meanwhile, after inching up $1.40 to $1,798.80 an ounce in the previous session, gold futures are inching rising $7.70 to $1,806.50 an ounce.

On the currency front, the U.S. dollar is trading at 115.60 yen compared to the 115.20 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1330 compared to yesterday’s $1.1326.