US stocks closed higher on Tuesday, even as Wall Street addressed hawkish interest rate talk from Federal Reserve officials and comments about inflation from Chairman Jerome Powell at an event hosted by the Riksbank.
The S&P 500 (^GSPC) rose 0.7%, and the Dow Jones Industrial Average (^DJI) added nearly 200 points, or 0.6%. The technology-heavy Nasdaq Composite (^IXIC) advanced 1%, up for the third day in a row.
Powell reaffirmed the importance of stabilizing inflation in a speech on Tuesday at a symposium on central bank independence in Stockholm, Sweden. He said that rate adjustment could require the Fed to take necessary measures, even if they are often unpopular.
“The issue of monetary policy independence lies in the benefits of insulating monetary policy decisions from short-term political considerations,” he said.
Elsewhere in a busy week of Fedspeak, Federal Reserve Governor Michelle Bowman stressed on Tuesday that there is still more work to be done to combat inflation despite recent improvements in data. She said the Fed will continue to raise interest rates to reach its long-term price stability target of 2%.
“I am committed to taking further action to bring inflation back to our target,” Bowman said at the Florida Bankers Association Leadership Luncheon in Miami, Florida.
In specific market moves, Coinbase (COIN) shares rose 13% after the cryptocurrency exchange said it would cut nearly 1,000 jobs as part of a restructuring plan. The company expects to incur approximately $149 million to $163 million in restructuring expenses. The move will mark Coinbase’s third round of layoffs since last year.
Billionaire Richard Branson shares of Virgin Orbit Holdings (VORB) fell 14% after one of the company’s rockets failed to reach its target orbit on a highly anticipated space mission due to a technical malfunction.
Investors continued to watch shares of beleaguered retailer Bed Bath & Beyond (BBBY) as it reported earnings that missed estimates, just a week after it was revealed that the company was considering filing for bankruptcy due to its financial struggles. Meme stock rose nearly 28% on Tuesday after rising 24% on Monday.
“As we shared last week, we continue to work with advisors as we consider all strategic alternatives to achieve our goals in the near and long term,” CEO Sue Goff said in an update on Tuesday, adding that “multiple paths are being explored.”
Shares of Bumble (BMBL) rose 7% after KeyBanc upgraded its women’s dating app from Sector Weight to Overweight and said the “competitive environment appears to be stabilizing, and economic pressures are easing.”
Shares of Oak Street Health (OSH) rose 27% after Bloomberg News reported Monday that CVS Health is exploring acquiring the primary care centers operator.
Tuesday’s moves come after a mixed start to the week that saw the tech-heavy Nasdaq extend gains from Friday’s rally while the other two major averages failed to sustain momentum. The Nasdaq rose 0.6% on Monday, while the S&P 500 and Dow closed down 0.1% and 0.3%, respectively, after hawkish comments from two other Fed officials.
San Francisco Fed President Mary Daley said during a live interview with the Wall Street Journal that she expects policymakers to raise interest rates above 5%, while adding that the final rate will ultimately depend on the path of inflation.
Echoing this view, Atlanta Fed President Raphael Bostic also said the US central bank should raise interest rates above 5% by early Q2 and then keep them there for “an extended period.”
“I’m not a pivotal guy,” Bostic said in remarks to the Atlanta Rotary Club on Monday. “I think we should pause and stop there and let the politics work.”
Thursday will bring the December Consumer Price Index (CPI) for investors – perhaps the most important economic release of the month and the last significant reading before the meeting of Federal Reserve officials from January 31st to February. 1 to provide the next interest rate increase.
Economists expect the core CPI to rise 6.6% from a year earlier in December, deviating downward from the 7.1% increase in November, according to data from Bloomberg. On a monthly basis, the CPI is likely to remain flat.
The report is likely to influence bets on whether the Fed will raise interest rates by 0.25% or 0.50% at the beginning of next month.
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Alexandra Semenova is a correspondent at Yahoo Finance. Follow her on Twitter @tweet
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