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Stocks are ending higher on Wall Street Tuesday, clawing back some of the ground they lost last week in their worst weekly drop since the beginning of the pandemic.

The S&P 500 rose 2.4%. It’s still 21.5% below the record high it set in January. The tech-heavy Nasdaq climbed 2.5% and the Dow Jones Industrial Average added 2.1%.

Markets will be closely watching congressional testimony this week from Federal Reserve Chair Jerome Powell for more clues about the Fed’s thinking about inflation and future interest rate hikes.

On Tuesday:

The S&P 500 rose 89.95 points, or 2.4%, to 3,764.79.

The Dow Jones Industrial Average rose 641.47 points, or 2.1%, to 30,530.25.

The Nasdaq rose 270.95 points, or 2.5%, to 11,069.30.

The Russell 2000 index of smaller companies rose 28.34 points, or 1.7%, to 1,694.03.

For the year:

The S&P 500 is down 1,001.39 points, or 21%.

The Dow is down 5,808.05 points, or 16%.

The Nasdaq is down 4,575.67 points, or 29.2%.

The Russell 2000 is down 551.28 points, or 24.6%.

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By Lewis Krauskopf, Devik Jain and Anisha Sircar

(Reuters) – Wall Street’s major indexes jumped on Tuesday as investors scooped up shares of megacap growth and energy companies after the stock market swooned last week on worries over a global economic downturn.

All 11 major S&P 500 sectors gained, as stocks rebounded broadly after the benchmark index last week logged its biggest weekly percentage decline since March 2020.

Investors are trying to assess how far stocks can fall as they weigh risks to the economy with the Federal Reserve taking aggressive measures to try to tamp down surging inflation. The S&P 500 earlier this month fell over 20% from its January all-time high, confirming the common definition of a bear market.

“Do I think we have hit bottom? No. I think we are going to see more volatility, I think the bottoming process will likely take some time,” said Kristina Hooper, chief global market strategist at Invesco. “But I do think it is a good sign to see investor interest.”

According to preliminary data, the S&P 500 gained 90.05 points, or 2.45%, to end at 3,764.89 points, while the Nasdaq Composite gained 269.78 points, or 2.50%, to 11,068.13. The Dow Jones Industrial Average rose 654.10 points, or 2.19%, to 30,542.88.

The energy sector, the top-gaining S&P 500 sector this year, surged after tumbling last week.

Megacap stocks Apple Inc, Tesla Inc and Microsoft Corp all rose solidly to give big individual boosts to the S&P 500.

The Fed last week approved its largest interest rate increase in more than a quarter of a century to stem a surge in inflation.

Investors are pivoting to Fed Chair Jerome Powell’s testimony to the U.S. Senate Banking Committee on Wednesday for clues on future interest rate hikes and his latest views on the economy.

Investors are “trying to read the tea leaves to see how aggressive the Fed is going to get,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. “That’s a hard question to answer right now because they are going to see what happens to the inflation story.”

Meanwhile, Goldman Sachs now expects a 30% chance of the U.S. economy tipping into recession over the next year, up from its previous forecast of 15%.

Graphic: VIX longterm – https://fingfx.thomsonreuters.com/gfx/mkt/zgpomdnwmpd/Pasted%20image%201655826597289.png

In company news, Kellogg Co shares rose after the breakfast cereal maker said it was splitting into three companies.

Spirit Airlines shares jumped after JetBlue Airways said on Monday it sweetened its bid to convince the ultra-low cost carrier to accept its offer over rival Frontier Airlines’ proposal.

(Reporting by Lewis Krauskopf in New York, Devik Jain and Anisha Sircar in Bengaluru; Editing by Sriraj Kalluvila, Arun Koyyur and Richard Chang)

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NEW YORK (AP) — Stocks that traded heavily or had substantial price changes Tuesday:

Tesla Inc., up $60.83 to $711.11.

CEO Elon Musk reportedly confirmed that the electric vehicle maker will cut its salaried workforce by about 10%.

Kellogg Co., up $1.32 to $68.86.

The maker of Frosted Flakes and Eggo waffles is splitting into three companies focused on cereals, snacks and plant-based foods.

Acadia Pharmaceuticals Inc., down $6.50 to $13.01.

An advisory committee for the Food and Drug Administration recommended against approval of the biopharmaceutical company’s Alzheimer’s drug.

Spirit Airlines Inc., up $1.69 to $22.97.

JetBlue raised its buyout offer for the budget airline amid its bidding war with Frontier Airlines.

Lennar Corp., up $1.02 to $65.65.

The homebuilder handily beat Wall Street’s fiscal second-quarter financial forecasts.

ODP Corp., down $4.75 to $30.25.

The owner of Office Depot and OfficeMax won’t divest its consumer businesses.

Chevron Corp., up $6.21 to $154.59.

Energy stocks gained ground along with rising oil prices.

DocuSign Inc., down $1 to $59.55.

The provider of electronic signature technology said CEO Dan Springer resigned.

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By Selena Li

HONG KONG (Reuters) – Stocks rose and the safe-haven dollar edged down on Tuesday as investors paused for breath after a steep selloff, but concerns remain about aggressive central bank interest rate hikes and risks of a global recession.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.3%, edging up from a more than five-week low hit and set for its best day in around two weeks. Japan’s benchmark Nikkei average gained 2.22%.

Gains were broadbased, but Chinese tech names were among the leaders with Hong Kong-listed firms up 1.9%.

European shares were also set to extend the previous day’s gains with EUROSTOXX 50 futures up 0.6% and FTSE futures gaining 0.5%.

U.S. markets, which were closed on Monday for a holiday, looked set for a bigger pop at the open with S&P 500 e-mini share futures 1.63% higher and Nasdaq e-mini share futures advancing 1.76%.

Nonetheless, some investors see the current bounce as short-lived.

“I think the green that we’re seeing this morning is not necessarily a function that people are moving back in towards risk assets,” said Kerry Craig, global market strategist at JPMorgan Asset Management.

“It’s just the normal behavior on the very large selloff to get some reprieve and breathing space come through because fundamentally, nothing has changed on the macro front last week.”

Central banks around the world are looking to raise interest rates aggressively to curb rising inflation, a sentiment underscored on Tuesday by Reserve Bank of Australia (RBA) Governor Philip Lowe, who pointed in a speech to further rate hikes.

“As we chart our way back to 2 to 3% inflation, Australians should be prepared for more interest rate increases,” Lowe warned. “The level of interest rates is still very low for an economy with low unemployment and that is experiencing high inflation.”

Australia’s S&P/ASX 200 index climbed 1.45% and the Aussie dollar was little changed.

Continuing the central bank theme, two Federal Reserve policy makers are due to speak later in the day, as are two speakers from the Bank of England, with traders watching their remarks closely for clues about the interest rate trajectory.

In currency markets, the dollar index, which tracks the greenback against a basket of its peers, edged down a little in line with the improved risk sentiment to 104.37, as the dollar lost a modicum of ground on the euro

“However, the risk rally should prove to be short-lived as major central banks maintained their hawkish tone,” said Ken Cheung, chief Asian FX strategist at Mizuho in a note.

The Japanese yen remained under pressure at 135.1 yen per dollar, not far off a 24-year low of 135.58 yen hit early last week. [FRX/]

In bond markets, the yield on U.S. benchmark 10-year treasury notes was 3.2825%, up from last Friday’s close of 3.2313.

Last week’s peak of 3.495% was the 10-year yield’s highest since 2011 and came the same day the Fed raised interest rates by a massive 75 basis points.

Oil prices swung higher with traders focusing on tight supplies over slowing global economic growth. U.S. crude rose 1.79% to $111.52 per barrel and Brent was at $115.47, up 1.17% on the day.

The United States is in talks with Canada and other allies globally to further restrict Moscow’s energy revenue by imposing a price cap on Russian oil without causing spillover effects to low-income countries, Treasury Secretary Janet Yellen said on Monday.

Spot gold traded nearly flat at $1,838.41 an ounce.

Bitcoin was at $20,629 having failed to break strongly above or below the psychologically significant $20,000 level in recent days.

(Reporting by Selena Li; Editing by Richard Pullin and Sam Holmes)

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TOKYO (Reuters) -Honda Motor Co Ltd said on Tuesday its joint venture in China with Guangzhou Automobile Group Co has begun building an electric vehicle factory in Guangdong province with an initial investment of 3.49 billion yuan ($522 million).

The Japanese automaker is aiming to start the factory’s operation in 2024, it said in a statement. The new factory has an annual production capacity of 120,000 units.

The dedicated EV plant will support Honda’s “core operation” of EV production in China, where competition for battery-driven vehicles is heating up, the company said.

Honda said another EV plant in China, in a joint venture with Dongfeng Motor Group, is also expected to start operations in 2024.

The Japanese automaker projected its annual automobile production capacity in China to increase by about 16% to 1.73 million units in two years.

($1 = 6.6872 yuan)

(Reporting by Sam Nussey; Editing by Tom Hogue and Muralikumar Anantharaman)

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By Andrea Shalal, David Lawder and Trevor Hunnicutt

WASHINGTON (Reuters) – U.S. President Joe Biden is considering scrapping tariffs on a range of Chinese goods to curb inflation, but no decision is likely before next week’s Group of Seven summit, people familiar with the matter said.

White House officials discussed options on Friday with Biden for reducing some of former President Donald Trump’s punitive duties on China, including potentially substantial cuts, three of the sources said. The scale of any potential final move is not yet decided, they said.

Biden’s advisers are poring over Trump-era tariffs on hundreds of billions of dollars of Chinese goods – many of which they see lacking strategic value, the sources said.

A White House spokesperson said the goal was to align the tariffs with U.S. economic and strategic priorities, safeguarding the interests of workers and critical industries, while not “unnecessarily raising costs on Americans.”

After weeks of fierce debate among key aides over the issue, Biden has come to favor swift action on the tariff issue, keen to use any leverage to reduce surging inflation ahead of the Nov. 8 midterm elections for control of Congress, two of the sources said.

The president told reporters on Saturday that he was in the process of making up his mind.

“Conversations on this issue are ongoing and intensifying,” a senior administration official told Reuters. “But this is not a binary (choice to) lift all tariffs or don’t. It has to make sense strategically.”

Margaret Cekuta, a former U.S. trade official who is now a principal with the Capitol Counsel lobbying firm, said easing tariffs would likely have a limited impact on inflation and could take about eight months to become fully effective.

“Economically it doesn’t make sense, but it could help combat the psychological impact of high inflation,” she said, adding that the administration was trying to analyze which tariff lines could have the greatest impact on prices.

One administration proposal calls for eliminating a large chunk of Trump’s punitive tariffs on Chinese consumer exports, except those on $50 billion of goods tied to an initial so-called Section 301 probe, which focused on circuit boards, semiconductors, and other “strategic” goods, said one of the sources. The proposal also excluded changes to tariffs on steel and aluminum.

But it could remove tariffs on a large number of consumer goods hit with tariffs in 2018 and 2019 as Trump’s trade war with Beijing escalated – some $320 billion at the time they were imposed. These included internet routers, Bluetooth devices, vacuum cleaners, luggage and vinyl flooring.

(Reporting by David Lawder, Andrea Shalal and Trevor Hunnicutt; Editing by Shri Navaratnam)

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DOHA (Reuters) – Cathay Pacific Airways, battered by strict quarantine rules that have led to a 98% fall in passenger numbers, is preparing to bring back more planes to rebuild Hong Kong’s hub status as restrictions ease, the airline’s chief executive said.

“We have about one-third of our passenger fleet still parked in the desert, not being utilised,” Cathay Chief Executive Augustus Tang told Reuters on the sidelines of an airline industry gathering in Doha. “We are making preparations for them gradually coming back ahead of the curve.”

Rival Singapore Airlines has seen a surge in demand since Singapore’s quarantine rules eased. It was back at 61% of pre-COVID-19 capacity in May, filling 78.2% of seats in its best month since the start of the pandemic.

Cathay, by contrast, operated only 4% of its pre-COVID capacity in May and filled 60.5% of its seats.

The need for crew members on passenger flights to quarantine in a hotel for three days after flying to destinations outside mainland China means it has few frequencies to offer potential transit passengers.

Passengers heading to Hong Kong also face a week of hotel quarantine on arrival, limiting demand.

Tang said it was encouraging that Hong Kong had gradually been reducing the quarantine time required, which once was as high as three weeks for passengers from destinations including the United States and Britain.

“It’s moving in the right direction, and the momentum is gathering and so we are pretty optimistic that we are going to see more and more of this opening up,” he said.

Cathay has 45 passenger destinations back in operation at present, up from 30 at the start of the year, and plans for up to 70 to be available by the end of the year as demand improves, he said. That compares to the 108 passenger destinations it operated before the pandemic.

(This story has been updated to correct the last paragraph to 45 passenger destinations instead of 45 passenger aircraft)

(Reporting by Jamie Freed, editing by Deepa Babington)

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Qatar to Become Largest LNG Exporter Worldwide butCannot Replace Russian Gas for Europe

The Gulf country partners with Italian energy giant ENI totake on the world’s biggest natural gas field

QatarEnergy and Italian energy multinational Eni will partner inthe expansion of the world’s largest liquefied natural gas (LNG)project, under a deal signed at the state-owned Qatari company’sheadquarters in Doha on Sunday.

QatarEnergy, which operates all oil and gas activities in Qatar,including exploration, production, refining, transport, andstorage, will own 75% of the new joint venture company, whileEni will own 25%.

The joint venture will hold a 12.5% interest in the entire NorthField East project, the world’s biggest natural gas field.

The $28.7 billion North Field East project, launched byQatarEnergy in the summer of 2019, is under construction. Itwill significantly enhance Qatar’s gas export capacity from thecurrent 77 million tons per year to 110 million tons per year.

The project will also focus on minimizing carbon emissions anddamage to the environment.

Europe is seeking to diversify its energy sources amid thesanctions placed on Russia after it invaded Ukraine. In addition,the European Union is trying to reduce its use of carbon-intensive coal.

Qatar, which has the third-largest natural gas reserves afterRussia and Iran, is partnering with international companies toexpand its production and export capacity. This will position theGulf state as the world’s largest LNG exporter.

“It is a strategic move for Eni, which expands Eni’s presence in the Middle East and gains access to a world-leading LNG producer,” the company said in a statement.

Amal Hamidallah, executive director of the Arab GulfFoundation, explained to The Media Line that the expansion wasplanned years ago but since the energy crisis hit Europe, Qatarhas helped Britain with extra supplies and announced acooperation deal with Germany.

“This explains why Italy and other EU companies want to beinvolved in this project,” she said.

Francesco Sassi, a researcher in energy geopolitics and marketsat Ricerche Industriali ed Energetiche, a research center andconsultancy based in Bologna, Italy, told The Media Line that inthe future Qatar will be able to add considerable quantities ofLNG to Europe’s supply.

He added, however, that for now, its capacity to increase exports is rather limited.

Hamidallah noted that filling the gap left by the reduction in theRussian gas supply to Europe is “not practically possible” rightnow, quoting Qatar’s Energy Minister Saad Sherida al-Kaabi.

Hamidallah said this is due to three main reasons.

First, Qatar’s current gas capacity can’t replace the 40% of EUnatural gas imports that came from Russia, she explained.

Second, continued Hamidallah, the transportation of the gas isan issue. “There are no gas pipelines from Qatar to Europe, soQatar’s gas would have to be shipped to Europe in liquefiedform,” she added.

And third, long-term contracts with partners such as those in Asia, mainly South Korea, Japan, and China, which are the main buyers of Qatari LNG, must be taken into account.

“Diverting cargoes from those long-term customers may incurcompensation claims from those buyers,” said Hamidallah.

Sassi added that Qatar’s strategic decision several years ago toheavily invest in the expansion of gas production, when themarket was oversupplied, will likely provide it with the abilityto choose whichever market suits its export plans.

On this issue, he said, “As things stand, I consider the Asianpartners much more reliable in commercial terms compared tothe EU ones.”

Right now, continued Sassi, “the overall point may be better formulated as: Are European countries ready to compete with Asian buyers in terms of pricing indexation and timing in order to secure Qatar’s LNG?”

The Asian buyers have been loyal buyers over the years, whilein the past, Europe avoided long-term contracts with the Gulfcountry, Hamidallah pointed out.

In the past, EU countries rejected the long-term deals that Qatarseeks for its energy due to the costs and carbon emissions, butthe Ukraine conflict has probably forced a change in attitude,she explained.

NATO Secretary-General Jens Stoltenberg said Sunday theconflict in Ukraine could last years, Hamidallah said.

Sassi added that by the time sanctions on Russia are lifted, “theworld’s energy order will be rather different compared to the onewe have been used to.

“Importers will have to struggle to find a new balance betweensecurity of supply and energy affordability,” he said.

Energy interdependence, and especially regarding gas, is the lastbridge standing of the EU-Russia relationship, he explained.

“When it will be politically viable, and it may take much timefor this, countries in Europe will attempt to cross this bridgeagain and a new interest in Russia’s competitive supplies couldemerge,” Sassi said.

One thing is for sure, Hamidallah said, the EU and leadingworld economies will need to redouble their efforts and joinforces to find alternative sources of LNG and reduce the overalldemand for natural gas moving forward toward the transition toclean energy.

Liquefaction of natural gas is energy-intensive, she pointed out,which emits carbon and that offsets climate benefits.

Rather than rush to secure gas supplies, “the internationalcommunity would do better to speed up the pace of energytransition as this is the only viable long-term answer to thecurrent world crisis,” Hamidallah said.

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SACRAMENTO, Calif. (AP) — California lawmakers are finally sending to Gov. Gavin Newsom a hot potato of a bill that would bar police from making arrests on a charge of loitering for prostitution, nine months after the measure passed the Legislature, the author of the bill announced Monday.

Democratic Sen. Scott Wiener and other supporters said arrests for loitering with the intent to engage in prostitution often rely on police officers’ perceptions and disproportionately target transgender, Black and Latino women.

Critics see it as a further erosion of criminal penalties that tie the hands of police on quality-of-life issues like shoplifting and car burglaries. Greg Burt, a spokesman for the California Family Council, and other opponents fear it’s part of an eventual effort to decriminalize prostitution.

“This bill seems to be perfect if you want sex trafficking to even increase in California,” he said. “This bill is really going to affect poor neighborhoods — it’s not going to affect neighborhoods where these legislators live.”

The bill would not decriminalize soliciting or engaging in sex work. It would allow those who were previously convicted or are currently serving loitering sentences to ask a court to dismiss and seal the record of the conviction.

The measure has passed both legislative chambers, but Wiener took the unusual step of stopping the bill from going to Newsom after the Assembly approved the measure in September with no votes to spare. More than two dozen of his fellow Democrats in the Assembly and Senate either voted no or declined to vote.

He wanted time, Wiener said then, “to make the case about why this civil rights bill is good policy … and why this discriminatory loitering crime goes against California values.”

But in the nine months since lawmakers acted, concerns about crime, homelessness and the perception that major California cities are becoming more unsafe have become more acute, providing fodder for political campaigns heading into the November election.

Among the bill’s supporters is San Francisco District Attorney Chesa Boudin, who voters just recalled from office in mid-term after critics mounted a campaign labeling him as soft on criminals.

Newsom, a Democrat running for reelection after easily beating back a recall last year, has said more needs to be done to address homelessness and shoplifting. Newsom’s spokespeople did not immediately comment on Wiener’s bill.

Burt believes lawmakers waited to send it to Newsom until after the governor defeated the recall and safely made it through the June 7 primary election.

The bill is sponsored in part by groups supporting gay and transgender rights, and Wiener said he waited to send the measure to Newsom until Pride Month, which celebrates the LGTBQ community.

“It is more important than ever to get rid of a law that targets our community,” said Wiener, who is gay. “Pride isn’t just about rainbow flags and parades. It’s about protecting the most marginalized in our community.”

The Los Angeles County Sheriff’s Department, the nation’s largest such agency, and the 75,000-member Peace Officers Research Association of California are among the opponents. Both say repealing it will hinder the prosecution of those who commit crimes related to prostitution and human trafficking and make it harder to identify and assist those being victimized.

In a statement to lawmakers, the sheriff’s department said the law is “often used to keep prostitutes from hanging around public places, business and residential communities, which can breed crime and drug use.”

While the intent is good, the unintended consequences will be to benefit sex buyers, the department said.

But Wiener said the loitering law “essentially allows law enforcement to target and arrest people if they are wearing tight clothes or a lot of makeup.” Similar legislation became law in New York last year, and Wiener cast his bill as part of a larger movement to end discrimination against and violence toward sex workers.

The debate split sex workers and advocates, with the American Civil Liberties Union of California supporting it and the nonpartisan National Center on Sexual Exploitation opposing it.

Once it formally reaches his desk, Newsom will have 12 days to sign or veto the measure.

Two other related measures already are law.

A bill passed in 2016 bars arresting minors for prostitution, with the intent that they instead be treated as victims. A 2019 bill bars arresting sex workers if they are reporting various crimes as a victim or witness. The same law bans using possession of condoms as reason for an arrest.

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SHANGHAI (Reuters) – China stood pat on its benchmark lending rates for corporate and household loans, as expected, on Monday, with global central banks’ rate increases making it tough for Beijing to stimulate a weak domestic economy by lowering rates.

Markets widely believe that Chinese policymakers are wary of risks that the yuan will depreciate and capital outflows will be triggered if they embark on further monetary easing to underpin a COVID-19-hit economy at a time when other major economies are tightening their rates policies.

The one-year loan prime rate (LPR) was kept at 3.70%, and the five-year LPR was unchanged at 4.45%.

“Perhaps there is some reluctance in loosening monetary policy to support economic activity, which could reflect some caution in moving in the opposite direction to other central banks, particularly the Federal Reserve,” said Stephen Innes, managing partner at SPI Asset Management.

“It seems a matter of time, however, before there are larger liquidity injections and measures to boost credit.”

Central banks across Europe raised interest rates last week, some by a level that shocked markets, in the wake of the Fed’s 75 basis point hike to combat high inflation.

“While the PBOC has little to fear from a weaker currency – the renminbi remains extremely strong – the last thing it wants is to have to defend against a sharp, potentially destabilising sell-off,” economists at Capital Economics said in a note earlier.

“That could plausibly happen if it lowered rates now when almost every other major central bank has turned much more hawkish.”

Divergent Sino-U.S. policies have wiped out China’s yield advantage in April, triggering a record monthly tumble in the yuan. And a deeper inversion of U.S. and Chinese government-bond yields could revive such depreciation pressure on the Chinese currency.

About 90% of traders and analysts in a Reuters survey last week expected China to keep both rates unchanged.

China lowered the five-year LPR, the benchmark reference rate for mortgages, by an unexpectedly wide margin last month, in a bid to revive the ailing housing sector to prop up the economy.

Most new and outstanding loans in China are based on the one-year LPR. The five-year rate influences the pricing of mortgages.

(Reporting by Winni Zhou and Brenda Goh; Editing by Kim Coghill and Muralikumar Anantharaman)

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