Wall St Set To Extend Bounce As Inflation Fears Ease

U.S. stock index futures edged higher on Monday, setting up Wall Street to extend gains from the previous week after a slide in commodity prices eased worries of prolonged inflation.

All three key indexes posted solid gains last week, with the Nasdaq Composite rising 7.5% as investors bet the retreat in oil prices from the three-month highs hit this month could ease inflationary pressures and push the Federal Reserve to moderate its aggressive policy tightening.

The U.S. central bank has rapidly raised interest rates to rein in 40-year-high inflation, stoking fears its actions could tip the world's largest economy into a recession.

After the benchmark S&P 500 index earlier this month recorded a 20% drop from its January closing peak to confirm a bear market, investors this week will try to gauge when the market might hit its bottom.

"The rebound in markets is a reminder of the merits of staying invested in line with a long-term plan. But volatility is likely to remain elevated until we see strong evidence that inflation is moderating, recession risks are receding, and geopolitical threats are declining," Mark Haefele, chief investment officer at UBS Global Wealth Management wrote in a client note.

Haefele added that the main driver of the markets in the second half of 2022 will be investor perceptions of whether we are headed for stagflation, reflation, a soft-landing, or a slump.

Shares across the board gained in premarket trading on Monday, with tech-focused growth stocks including Tesla Inc, Netflix Inc, Alphabet Inc and Apple Inc up between 0.6% and 1.4%.

At 6:48 a.m. ET, Dow e-minis were up 58 points, or 0.18%, S&P 500 e-minis were up 10.75 points, or 0.27%, and Nasdaq 100 e-minis were up 47.5 points, or 0.39%.

Shares of Robinhood Markets rose 3.5% after media reports said Goldman Sachs upgraded the retail broker's stock to "neutral" from "sell".

Goldman Sachs, however, cut rating on Coinbase Global Inc to "sell" from "buy", according to media reports, sending shares of the cryptocurrency exchange lower by 4.8%.