After three weeks of Wall Street decline, dip buyers are attracted to good valuations, driving up US stock futures. US stock futures are trading in green and are rallying higher. S&P 500, Dow 30, and Nasdaq Composite indices are showing strength before the market opens on Tuesday. The US stock market was closed on September 5 on account of Labor Day and reopened on Tuesday, September 6 after an extended weekend.
The rally comes after equities declined over the previous three weeks due to worries about the effects of monetary tightening on the economy. It seems the current valuations are appearing to be lower and are fuelling the rally as the stock market resumed trading after the Labor Day holiday.
Energy price increases are making it more difficult for monetary officials to control rising price pressures and the possibility of a recession. The ECB is the next topic of discussion, and economists at several of the top Wall Street banks anticipate hearing about a 75 basis point increase from it on Thursday.
In premarket trading, Bed Bath & Beyond shares saw a dip, while big tech stocks including Apple and Microsoft are in positive territory.
US stocks have given up half of their summer surge as investors worry that the Federal Reserve would do whatever it takes to control price inflation. Despite a positive jobs report, worries remained. The latest selloff has lowered the valuation of the S&P 500 to 16.5 times anticipated earnings, which is less than the average of 17.2 times over the previous ten years.
The final consumer price index statistics, which are coming on September 13th, will be the next significant economic indicator in the US. The print will be crucial in determining the size of the rate hike that the Fed is anticipated to announce on September 21.