Dow Futures Rise 300 Pts; Powell Speech, Durable Goods in Focus

September 27, 2022 7:38 AM EDT

By Peter Nurse -- U.S. stocks are seen opening higher Tuesday, rebounding as investors seek out bargains after recent sharp losses but remain concerned about future growth as the Federal Reserve tightens monetary policy.

At 07:00 ET (11:00 GMT), the Dow Futures contract was up 300 points or 1%, S&P 500 Futures traded 45 points or 1.2% higher, and Nasdaq 100 Futures climbed 150 points or 1.4%.

The major equity averages slumped further on Monday, extending last week's declines with the fifth straight day of losses. The blue-chip Dow Jones Industrial Average ended over 300 points or 1.1% lower, entering a bear market territory, while the broad-based S&P 500 fell 1%, closing at its lowest level this year. The tech-heavy Nasdaq Composite ended down 0.6%.

Investors can't stop worrying about the U.S. economy entering recession, with the Federal Reserve determined to tame inflation running at 40-year highs, whatever the extent of the economic pain that its aggressive interest rate hikes cause in the short run.

Cleveland Fed President Loretta Mester made this clear on Monday, saying the U.S. central bank needs to keep policy restrictive for some time, and if there is an error to be made, better that the Fed do too much than to do too little.

Goldman Sachs downgraded equities to underweight in its global allocation over the next three months, saying, in a note, that "current levels of equity valuations may not fully reflect related risks and might have to decline further to reach a market trough."

This week will feature speeches by a slate of Fed officials, including Chairman Jerome Powell later Tuesday, while investors will also be watching for August durable goods orders as well as September consumer confidence for signs that the monetary tightening is indeed having an impact on economic growth.

Oil prices gained Tuesday, rebounding from the lowest levels since January as markets weighed the potential for a reduction in supply even as recessionary concerns, tighter monetary policy, and a rally in the dollar dimmed the outlook for demand.

Major crude producers BP and Chevron said that they had cut production at some offshore oil platforms in the Gulf of Mexico in anticipation of Hurricane Ian.

Additionally, the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, meets next week and could follow up last month’s modest cut in output.

The American Petroleum Institute releases its latest estimate for U.S. crude stocks later in the session, with another modest rise expected, which would be the fifth straight weekly rise if confirmed.

By 07:00 ET (11:00 GMT), U.S. crude futures traded 1.4% higher at $77.78 a barrel, while the Brent contract rose 1.5% to $84.13. Both contracts sank by about $2 a barrel on Monday, adding on to Friday's 5% slump.

Additionally, gold futures rose 0.7% to $1,644.20/oz, while EUR/USD traded 0.2% higher at 0.9627.

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Goldman Sachs, Standard & Poor's, Crude Oil, OPEC, Jerome Powell