US open: Stocks rebound as Fed remains in focus

US stocks rebounded on Tuesday from the previous day’s decline amid speculation of an interest rate hike in June.

The Dow Jones Industrial Average rose 0.35%, the S&P 500 gained 0.43% and the Nasdaq climbed 0.61% at 1430 BST.

Hawkish statements from Federal Reserve officials had sent US equities into the red at the close on Monday.

St Louis Federal Reserve president James Bullard said that the relatively tight labour market in the US may place upward pressure on inflation, strengthening the case for higher interest rates.

Fellow Fed policymaker Eric Rosengren said in an interview with the Financial Times, published on Monday, that the US economy was displaying the conditions needed for a 25 basis point interest rate hike at the 14-15 June meeting.

San Francisco Fed chief John Williams said three or four interest rate hikes over the course of 2017 was also "about right", Reuters reported.

Societe Generale strategist Kit Juckes said: “The odds of a June Fed rate hike have risen to 30% according to Bloomberg, but the vast majority of people I speak to think the UK’s EU membership referendum will be enough to stay the Fed’s hand.

“For those tempted to look for an early move, July is the favourite, and the odds there, have increased to above 50%. I should add that SG’s US economics team doesn’t share that view, expecting a Q4 move, but the contrast with the UK where the chances of a July hike (pot-referendum, remember) remain firmly at zero.”

Meanwhile, oil prices reversed earlier falls with West Texas Intermediate crude up 0.82% and Brent up 0.45% to $48.57 per barrel at 1414 BST.

In economic data, US new home sales figures are due at 1500 BST and the Richmond Fed manufacturing index will be released at 1500 BST.

On the corporate front, Toll Brothers gained after reporting better-than-expected second-quarter profit and revenue ahead of the open.

Best Buy slumped as it announced the departure of its chief financial officer and warned that earnings in the second quarter would hit by a disruption in supply of some high-margin products after an earthquake in Japan.

In currencies, the dollar rose 0.58% against the euro and grew 0.52% against the yen but fell 0.85% versus the pound.