The S&P 500 closed slightly higher after Federal Reserve Chairman Jerome Powell reiterated in testimony to Congress on Wednesday that the economic recovery in the United States has still not progressed enough to start cutting back buying of ‘assets.
Megacap tech stocks edged up the S&P 500 and bond yields fell as investors turned to defensive favorites, with Federal Reserve Chairman Jerome Powell arguing for continued economic recovery.
The S&P 500 closed slightly higher, with Powell pointing out in congressional testimony that the US economic recovery has still not progressed enough to start reducing asset purchases.
Apple, Google’s parent company, Alphabet, and Microsoft hit all-time highs. Bank of America fell after second quarter results failed to impress investors, while Wells Fargo & Co. rose.
The 10-year US Treasury yield fell back below 1.4% and the dollar fell. Powell added that inflation is expected to remain high for the next several months before moderating.
“This confirms our view that the Fed wants the economy to run at full speed and tolerate short-term inflation overruns,” said Steven Ricchiuto, chief US economist at Mizuho Americas.
An earlier report showed that prices paid to U.S. producers rose more than expected in June, indicating pressure is mounting on companies to pass the higher costs on to consumers.
June’s consumer inflation impression in the United States beat all expectations on Tuesday and underscored higher costs associated with reopening after the pandemic. Powell reiterated that Fed officials expect such pressures to be transient, but some commentators see a risk of more lasting increases that could force a faster-than-expected cut in stimulus measures.
“The Fed remains focused on the employment situation,” said Ross Mayfield, investment strategy analyst at Baird. “So while the recovery in some parts of the economy is fully complete and has even exceeded pre-covid levels, the fact that we are still missing about 7 million non-farm jobs before the pandemic, participation The labor market is weak and the unemployment rate is above 4-5% means the Fed will remain accommodating. But there is no doubt that the inflation figures are starting to put them in a bind. “
Global stocks remain close to a record high and a range of other factors are influencing the outlook. They include the spread of the more contagious delta variant of Covid-19, the possibility of a peak in profits and economic growth, and the US budget spending plans.
Oil fell with increased gasoline and distillate inventories as well as an increase in US 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
Here 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 has changed little
- 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 per dollar
- The yield on 10-year treasury bills fell seven basis points to 1.35%
- German 10-year rate fell three basis points to -0.32%
- The UK 10-year yield was little changed at 0.63%
- West Texas Intermediate crude fell 3.4% to $ 72.72 a barrel
- Gold futures rose 1% to $ 1,828.20 an ounce