Dow futures surge over 500 points after three-day break

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U.S. stock index futures rose on Tuesday after a three-day holiday weekend, following the worst weekly performance for equities in more than two years.

What’s happening
  • Futures on the Dow Jones Industrial Average YM00, +1.61% rose 525 points, or 1.8%, to 30394.
  • Futures on the S&P 500 ES00, +1.78% gained 72.25 points, or 2%, to 3748.
  • Futures on the Nasdaq 100 NQ00, +1.82% increased 238 points, or 2.1%, to 11535.

Last week was the worst for the S&P 500 index since the stretch ending March 20, 2020, when the U.S. was first battling the coronavirus pandemic. The Dow Jones Industrial Average DJIA, -0.13% ended last week with a loss of 4.8%, the S&P 500 SPX, +0.22% dropped 5.8% and the Nasdaq Composite COMP, +1.43% dropped 4.8%.

What’s driving markets

Investors have been focusing on the surge in inflation which has led the Federal Reserve and other central banks to raise interest rates, as well as on the war in Ukraine that has crippled grain exports and triggered sanctions on energy exporter Russia.

“The risks of a recession are rising, while achieving a soft landing for the U.S. economy appears increasingly challenging,” said Mark Haefele, chief investment officer for global wealth management at UBS.

Haefele said UBS reduced its earnings estimate for S&P 500 index companies for next year by 2% and cut its estimate of forward price-to-earnings to 16.6 from 17.9.

President Joe Biden said Monday that he will decide by the end of the week whether to order a holiday on the federal gasoline tax, as he also said a U.S. recession was not inevitable. Biden spoke with former U.S. Treasury Secretary Larry Summers, who said the jobless rate needs to spike to lower inflation.

The main U.S. economics release Tuesday is the May existing home sales report, which is expected to show a decline in activity as mortgage rates have surged.