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U.S. stock futures point higher as inflation worries fade

U.S. stock-index futures were on the rise Tuesday, finding support after remarks by Federal Reserve officials soothed fears that rising inflation pressures would prompt policy makers to suddenly tighten monetary policy.

What are major indexes doing?

On Monday, stocks rose, with technology shares leading the way. The Dow
DJIA,
+0.54%

rose 185.14 points, or 0.5%, to finish at 34,393.98. The S&P 500
SPX,
+0.99%

advanced 1%, while the Nasdaq Composite
COMP,
+1.41%

closed with a gain of 1.5%.

What’s driving the market?

Rising inflation has been blamed for heightened stock-market volatility after data earlier this month showed the consumer-price index rose 4.2% year-over-year in April. The data prompted fears the Federal Reserve could move earlier than anticipated to begin pulling back on its monetary policy accommodation.

Since then, Fed officials, with few exceptions, have offered reassurances that they view near-term inflation pressures as transitory, signaling they would look through a near-term pickup in price pressures as the economy recovers from the coronavirus pandemic.

“As a chorus of Fed officials reiterated that the recent pickup in inflation would be transitory, investor fears were soothed about rising prices forcing higher interest rates,” said Lukman Otunuga, senior research analyst at FXTM, in a note. “U.S. equity bulls rejoiced on this development, encouraging buying in expensive growth stocks in sectors such as technology.”

Reassurances by Fed officials, however, haven’t fully erased investor worries, he said, which means markets will remain highly sensitive to changes in inflation expectations and remarks by policy makers, he said.

Bitcoin prices have stabilized, squelching another source of broader market volatility, after extending a tumble last week that took the price of the digital asset down 50% from its all-time high above $60,000 over the weekend.

Read: Dogecoin, bitcoin prices climb as Elon Musk solicits help to improve meme coin, talks sustainability with miners

The CoreLogic Case-Shiller U.S. home price index for March is due at 10 a.m. Eastern. A May consumer-confidence index reading is due at 10 a.m., while data an April new-home sales is slated for the same time.

Which companies are in focus?
  • Shares of Lordstown Motors Corp.
    RIDE,
    +0.94%

    were down nearly 14% in premarket trade after the electric-vehicle startup late Monday reported a wider quarterly loss and said it is seeking “additional capital” to fund itself.

  • AutoZone Inc.
    AZO,
    -0.81%

    shares were up more than 1% after reporting earnings and revenue that topped forecasts, while same-store sales in the fiscal third quarter rose 28.9%.

  • Amazon.com Inc.
    AMZN,
    +1.31%

    is near a deal to acquire Hollywood studio MGM Holdings for almost $9 billion including debt, The Wall Street Journal reported Monday, citing people familiar with the matter. Amazon shares were up 0.6%.

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