By Devik Jain

(Reuters) -The Dow and the S&P 500 were set to open higher on Tuesday, as bank shares gained on growing bets of aggressive interest rate increases by the Federal Reserve and sportswear maker Nike rose after upbeat quarterly results.

Traders expects a 67.6% chance of a 50-basis point (bps) rate hike in the Fed’s policy meeting in May after Chair Jerome Powell said on Monday the central bank must move “expeditiously” to combat inflation.

The Fed had last week raised interest rates by 25 bps, the first increase since late 2018. [IRPR]

“Now that the Fed has embarked on a hawkish stance, the market is accepting that because they are taking a serious stand to fight inflation,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

Big banks gained in premarket trading, with Morgan Stanley and Wells Fargo up 0.8%. A widely watched section of the yield curve held just above a two-year low hit on the previous day as some investors feared that aggressive tightening may slow economic growth. [US/]

“That opens a debate as to whether or not eventually the Fed tightening is going to bring us towards recession. For now, we’re not seeing the market reacting to this huge jump that we had in yields and the partial flattening of the yield curve,” Cardillo said.

Nike shares advanced 5.2% as the world’s biggest sportswear maker beat quarterly profit and revenue expectations, and said manufacturing issues pinching sales over the past six months were now behind it.

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

The Kremlin said it would like ongoing talks between Moscow and Kyiv to be more “active and substantive”, as fighting between Russian and Ukrainian forces continued.

Rising uncertainty around the conflict and hawkish comments from Powell had on Monday weighed on investor sentiment, leading to Wall Street’s main indexes snapping four sessions of gains.

At 08:19 a.m. ET, Dow e-minis were up 139 points, or 0.4%, S&P 500 e-minis were up 8.75 points, or 0.2%, and Nasdaq 100 e-minis were down 0.75 points, or 0.01%.

Tesla Inc rose 0.4%, as the electric-car maker geared up to deliver the first 30 Model Y cars made at its 5 billion euro ($5.5 billion) European plant.

Alibaba Group Holding jumped 8.6% after the Chinese e-commerce giant raised its share buyback program to a record $25 billion.

(Reporting by Devik Jain in Bengaluru; Editing by Sriraj Kalluvila and Arun Koyyur)