US stocks jump 2% after recent selloff; yen drops to lowest level in 22 years

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Stocks on global indexes rose sharply on Tuesday, with major U.S. stock indexes each ending up more than 2% following a recent selloff, while the Japanese yen fell against the U.S. dollar to its lowest level since October 1998.

Wall Street climbed as participants returned from a long weekend, with investors buying up shares of megacap growth and energy companies hit last week by global economic worries.

“After back-to-back weeks of 5% declines, you’ve pushed the ball under the water far enough now that we’re getting a bounce,” said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago.

But, Nolte said, “interest rates are still going higher. Oil is still going higher.”

Energy shares climbed along with oil prices. Oil gained on high summer fuel demand. The S&P 500 energy index .SPNY jumped 5.1%.

Last week, the S&P 500 confirmed it is in a bear market as investors sold stocks amid worries over whether the Federal Reserve will be able to tame inflation without triggering a recession.

Investors expect interest rate hikes from other major central banks as well.

The Dow Jones Industrial Average .DJI rose 641.47 points, or 2.15%, to 30,530.25, the S&P 500 .SPX gained 89.95 points, or 2.45%, to 3,764.79 and the Nasdaq Composite .IXIC added 270.95 points, or 2.51%, to 11,069.30.

The pan-European STOXX 600 index .STOXX rose 0.35% and MSCI’s gauge of stocks across the globe .MIWD00000PUS gained 1.91%.

U.S. Treasury yields were higher as the risk-off mode that weighed on U.S. markets last week took a breather.

Benchmark 10-year yields US10YT=RR climbed to 3.303% from their 3.239% close at the end of last week.

All eyes are now on Fed Chair Jerome Powell’s testimony to the Senate Banking Committee on Wednesday for clues on rates.

Goldman Sachs has said it now thinks there is a 30% chance of the U.S. economy tipping into a recession over the next year, up from its previous forecast of 15%.

In the foreign exchange market, the yen dropped to a new 24-year low JPY=EBS.

Japanese Prime Minister Fumio Kishida said the central bank should maintain its current ultra-loose monetary policy. This makes it an outlier among other major central banks.

The dollar index was little changed at 104.41 =USD, but it was supported overall by the expectations of rate hikes at upcoming Fed meetings.

Brent crude futures LCOc1 rose 52 cents, or 0.5%, to settle at $114.65 a barrel. The U.S. West Texas Intermediate (WTI) crude CLc1 contract for July expired on Tuesday, closing at $110.65, with a gain of $1.09, or 1%. The more active August contract CLc2 was up $1.53 at $109.52.

Spot gold XAU= dropped 0.3% to $1,832.77 an ounce.

Bitcoin BTC=BTSP last rose 1.56% to $20,876.57. – Reuter

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