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Wall Street Ready to Extend Bounce Thanks to Easing Inflation Fears

On Monday, US stock index futures climbed, indicating that Wall Street would continue extending gains from last week. This was in light of easing worries concerning prolonged inflation because commodity prices fell.

Last week’s rebound

All three of the prominent US stock indexes had recorded solid gains in the last week. There was a 7.5% gain recorded in the Nasdaq Composite, which prompted investors to bet that inflationary pressures could ease due to the fall in oil prices, after they had reached a high of three months. Plus, there were also predictions that easing of inflationary pressures would push the US Federal Reserve to moderate their aggressive monetary tightening policy as well.

Interest rates have been hiked up rapidly by the US central bank in order to control inflation that has climbed to highs not seen in 40 years. This had fueled fears that the largest economy in the world could dip into recession due to such tightening.

Earlier this month, the benchmark S&P 500 index had also entered the bear market territory, as it dropped 20% below its highest closing value in January. Therefore, investors are now going to try and gauge when the markets have bottomed out.

Analysts stated that the rebound recorded in the previous week highlights the benefits of staying invested in the markets for the long term. However, it is important to note that volatility is not expected to ease any time soon unless there is strong evidence that inflation has reached its peak, the geological worries ease and recession risks begin to recede.

The second half of the year

According to analysts, the markets will be driven by investor perceptions in the second half of the year. These perceptions can be of a slump, stagflation, soft-landing, or even reflation. On Monday, premarket trading saw shares record gains across the board. As a matter of fact, tech-focused growth stocks recorded gains between 0.6% and 1.4%, which included some hefty names like Netflix Inc., Apple Inc., Alphabet Inc., and Tesla Inc.

Futures climb

At 6:48 a.m. ET, there was a 0.18% increase in Dow e-minis, or 58 points, while a 0.27% gain was recorded in S&P 500 e-minis, which is about 10.75 points. There was also a 0.39% gain in Nasdaq 100 e-minis, as they were up by 4.75 points.

There was a 3.5% increase recorded in the share price of Robinhood Markets. This was after media reports revealed that the retail broker’s stock had been upgraded by Goldman Sachs from ‘sell’ to ‘neutral’. However, media reports further disclosed that Goldman Sachs had changed its rating for Coinbase Global Inc.

The change was from ‘buy’ to ‘sell’ and this sent the crypto exchange’s share price down by 4.8%, which is yet another blow to the company that is already struggling amidst the downturn in the crypto market. Coinbase has already announced laying off employees and shutting down its Coinbase Pro feature, as the volatility in the crypto market continues to take its toll.

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