By Devik Jain

(Reuters) – The Dow and the opened higher Tuesday as bank shares gained due to growing expectations of an aggressive Federal Reserve interest rate increase and sportswear manufacturer. Nike (NYSE:) rose after upbeat quarterly results.

Traders believe there is a 67.6% chance that the Fed will raise the 50-basis points (bps), rate at its May policy meeting. That’s after Fed Chair Jerome Powell on Monday said the central bank needed to act “expeditiously” in order to reduce inflation.

Last week, the Fed raised interest rates 25 basis points. This was the first rate increase since 2018. [IRPR]

Peter Cardillo (chief market economist, Spartan Capital Securities) in New York stated that “now that the Fed is taking a hawkish stand, the market has accepted that since they are taking an honest stand to combat inflation.”

Premarket trading was a big win for the banks, Morgan Stanley (NYSE: Wells Fargo (NYSE) up 0.8%. The yield curve’s most closely watched segment held at 0.8% above the two-year mark, as investors worried about aggressive tightening slowing economic growth. [US/]

The debate rages over whether the Fed’s tightening will lead us to recession. Cardillo explained that for now the market has not reacted to the large jump in yields as well as the partial flattening yield curve.

Nike shares rose 5.2% after the world’s largest sportswear manufacturer beat revenue and profit expectations for the quarter. The company said that manufacturing problems which had impacted sales in the last six months are now over.

Meanwhile, Russia’s coupon payment on a sovereign bond maturing in 2029 was processed by correspondent bank JPMorgan Chase & Co (NYSE:), a source said on Monday, the second time in recent days the country appears to have averted default.

According to the Kremlin, it wants ongoing discussions between Moscow and Kyiv more substantive and active than fighting between Ukrainian and Russian forces.

Investor sentiment was affected by the rising uncertainty surrounding the conflict, and Powell’s hawkish remarks on Monday. Wall Street saw four sessions of gains.

At 08:19 AM. ET were up by 139 points or 0.4%. They were also up 8.75 points or 0.2% and down 0.75 point or 0.01%.

Tesla (NASDAQ) Inc rose 0.4% after the electric car maker prepared for the delivery of the first 30 Model Y models at its European facility in Europe, which costs 5 billion euros ($5.5 billion).

Alibaba Group Holding rose 8.6% following a record-breaking $25 billion increase in the share buyback program by Chinese ecommerce giant Alibaba.