The S&P 500 closed slightly higher after Federal Reserve Chairman Jerome Powell reiterated Wednesday in Congressional testimony that the U.S. economic recovery has not yet advanced far enough to begin reducing asset purchases.
Megacap’s technology stocks pushed the S&P 500 marginally higher and bond yields fell as investors turned to defensive favorites, with Federal Reserve Chairman Jerome Powell advocating maintaining economic stimulus.
The S&P 500 closed slightly higher, with Powell pointing out in Congressional testimony that the U.S. economic recovery has not yet advanced far enough to begin reducing asset purchases.
Apple, Google parent Alphabet and Microsoft reached all-time highs. Bank of America fell after second-quarter earnings didn’t impress investors, while Wells Fargo & Co. he was winning.
The ten-year US Treasury yield fell below 1.4% and the dollar fell. Powell added that inflation is likely to remain high in the coming months before moderating.
“This supports our view that the Fed wants the economy to collapse and will tolerate a short-term outpouring of inflation,” Steven Ricchiuto, chief U.S. economist at Mizuho Americas, said.
An earlier report showed that prices paid to U.S. producers rose in June more than expected, indicating that pressure on companies is increasing to pass on higher costs to consumers.
The June U.S. consumer inflation release on Tuesday exceeded all expectations and pointed to higher costs associated with the reopening of the pandemic. Powell reiterated that Fed officials expect these pressures to be transitory, but some commentators see the risk of more lasting increases that could force a faster-than-expected reduction in the stimulus.
“The Fed continues to focus on the laser in the employment situation,” said Ross Mayfield, Baird’s investment strategy analyst. “So while the recovery in some parts of the economy is fully complete and has even surpassed pre-povid levels, the fact that we are still about 7 million below pre-pandemic non-farm payrolls, the labor force participation is weak and the unemployment rate is above 4-5% means the Fed will remain accommodative. But without a doubt, inflation figures are starting to put them in jeopardy. “
Global stocks remain close to a record and a number of other factors influence the outlook. They include the spread of the most contagious delta variant of Covid-19, the possibility of a peak in revenue and economic growth, and U.S. tax spending plans.
Oil fell with rising gasoline and distillate inventories, as well as an increase in U.S. production during peak summer demand.
Here are some events to watch this week:
- Bank of Korea monetary decision Thursday
- Bank of Japan interest rate decision Friday
These are some of the main movements in the financial markets:
- The S&P 500 rose 0.1% at 4:05 p.m. New York time
- The Nasdaq 100 rose 0.2%
- The Dow Jones industrial average rose 0.1%
- The MSCI World index changed little
- The Bloomberg Dollar Spot Index fell 0.5%
- The euro rose 0.5% to $ 1.1835
- The British pound rose 0.3% to $ 1,3859
- The Japanese yen rose 0.6% to $ 109.97
- Ten-year Treasury yield fell seven basis points to 1.35%
- Germany’s ten-year yield fell three basis points to -0.32%
- The ten-year yield in the UK varied little, with 0.63%
- West Texas crude oil fell 3.4% to $ 72.72 a barrel
- Gold futures rose 1% to $ 1,828.20 an ounce