By Peter Nurse
Investing.com — U.S. stocks are seen opening lower Tuesday, handing back some of the previous week’s gains after a long weekend with Federal Reserve’s plans to tighten monetary policy in focus.
At 7 AM ET (1100 GMT), the contract was down 175 points, or 0.5%, traded 20 points, or 0.5%, lower and dropped 20 points, or 0.2%.
Wall Street was closed on Monday due to the Memorial Day holiday, but the main indices are expected to weaken after the previous week saw the best weekly gains for the and since November 2020.
Investor sentiment was lifted by a combination of solid earnings from the retail sector as well as an inflation report that showed prices could be easing. This gave rise to expectations that the Fed could pause its hiking cycle after two further rises of 50 basis points in June and July.
However, Fed Governor Christopher Waller put a dent into that theory, suggesting that the central bank needs to move much higher and soon if high does not begin to subside.
“If inflation doesn’t go away, that… rate is going a lot higher, and soon,” Waller said on Monday. “We are not going to sit there and wait six months…I am advocating 50 on the table every meeting until we see substantial reductions in inflation. Until we get that, I don’t see the point of stopping.”
Additionally, evidence from Europe wasn’t encouraging after inflation in the Eurozone surged to a new record high in May. The in the region climbed to 8.1% in the 12 months through May, up from 7.4% in April and well ahead of analysts’ forecasts for a rate of 7.7%.
There is more U.S. data due Tuesday, including the March , the for May, and most importantly the Conference Board’s index for May, while U.S. President Joe Biden is to meet with Federal Reserve Chair Jerome Powell to discuss how to bring down inflation.
In the corporate sector, there will be more quarterly earnings to digest, with the likes of (NYSE:), (NYSE:), and (NYSE:) due to report earnings after the bell.
Oil prices extended gains Tuesday, recording new two-month highs after the European Union agreed to substantially reduce oil imports from Russia, tightening an already strained crude market.
The EU agreed in principle late Monday to cut 90% of oil imports from Russia by the end of 2022, managing to resolve a deadlock with Hungary over the bloc’s toughest sanction yet on Russia over its invasion of Ukraine.
By 7 AM ET, futures traded 1.2% higher at $118.62 a barrel, while the contract rose 1.5% to $119.31.
Additionally, fell 0.3% to $1,850.95/oz, while traded 0.7% lower at 1.0702.