US Stock Market: DJIA, S&P500 and Nasdaq turns green in early trade on Tuesday

Stocks were trading higher in morning trade on Wall Street on Tuesday and oil prices dropped as investors remain focused on the impact of inflation.

The S&P 500 rose 1.02% to 4,506.68 as of 10:41 am Eastern Time Zone. The Dow Jones Industrial Average rose 284.13 points or 0.82% to 34,837.12, The Nasdaq rose 237.38 points or 1.72% to 14,075.63.

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Banks stocks supported the gains as bond yields continued rising. Higher bond yields allow banks to charge more attractive interest on loans. The yield on the 10-year Treasury surged to 2.28% from 2.30% late Monday. Bank of America rose 3.6% and JPMorgan Chain jumped 2.7%.

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Technology stocks and retailers also traded higher. Nike climbed 5.1% after posting better-than-expected third-quarter financial results. Energy stock plunged as oil prices fell. US benchmark crude oil fell 1.5%. Markets in Europe were higher and Asian markets also closed with significant gains.

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Following a day of choppy trading, broad gains followed comments from Federal Reserve Chair Jerome Powell that the central bank was prepared to raise interest rates more aggressively to combat inflation if required. According to Powell, the Fed will raise its benchmark short-term interest rate by a half-point at multiple meetings if necessary.

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On March 16, the Fed announced a 25 percentage point rate hike, its first interest rate increase since 2018. The Fed hasn’t raised its key interest rate by a half-point since May 2000.

Investors remained worried about consistently rising inflation due to Russia’s war in Ukraine.

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Energy and commodity prices were already high due to escalating demand amid the global economic revival, but the conflict has pushed oil, wheat and other prices even higher.

Elevating raw materials costs and shipping problems have made it more costly for businesses to operate. Many of those expenses have been passed on to customers and higher prices for food, clothing and other goods could result in reduced spending and slower economic growth.

(With AP inputs)