U.S. stocks rallied Tuesday as investors set their expectations for more aggressive interest rate hikes.
The major averages finished the session higher, rebounding from losses Monday after Federal Reserve Chair Jerome Powell vowed to take "necessary steps" as "inflation is much too high." Powell said the central bank could raise rates by more than the previously forecast quarter-percentage-point hike per meeting.
Wall Street raised its expectations for rate hikes following Powell's comments. Goldman Sachs on Monday upped its forecast to half-point rate hikes at the May and June Fed meetings.
The benchmark 10-year U.S. Treasury yield at its highs of Tuesday hit 2.392%, its highest since May 2019. Bank stocks moved higher with rising rates, as Bank of America gained more than 3%.
Meanwhile, Nike gained 2.2% after a better-than-expected quarterly report, boosted by strong demand in North America.
"Stocks have done okay … in recent sessions," U.S Bank Wealth Management's Lisa Erickson told "Squawk Box" on Tuesday. "It's on the back of what's going on fundamentally with the macroeconomy as well as with underlying company earnings."
"There has been some slowing, but, really, both of those factors have been quite resilient," Erickson added.
