Stock futures open slightly higher after the market's sharp rally on Monday

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Major averages are coming off a sharp rebound as investors weigh the economic reopening and Federal Reserve policy.

"Stocks staged a strong rebound on Monday, although all the S&P did was recoup its decline from Friday," according to Vital Knowledge's Adam Crisafulli. "Cyclical stocks may have rebounded on Monday, but they are still in a downtrend and investors should use rallies to book profits."

Federal Reserve Chairman Jerome Powell will testify before the House of Representatives Tuesday on the central bank's response to the pandemic. His remarks, which were released ahead of the hearing Monday evening, are likely to support the notion that the Fed is ready to soon start discussing removing some of its unprecedented stimulus measures enacted during the pandemic.

"Since we last met, the economy has shown sustained improvement," Powell will say Tuesday, according to the Fed release. "Widespread vaccinations have joined unprecedented monetary and fiscal policy actions in providing strong support to the recovery. Indicators of economic activity and employment have continued to strengthen, and real GDP this year appears to be on track to post its fastest rate of increase in decades.

"Inflation has increased notably in recent months," Powell will say. But the Fed chief will note that most of those are a temporary effect and that inflation should settle back to 2% over the long term. On Tuesday morning the Federal Reserve Bank of Philadelphia will release its non-manufacturing business data, the National Association of Realtors will publish existing home sales data for May and the Federal Reserve Bank of Richmond will release the results of its monthly Survey of Manufacturing Activity.

 

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