As Federal Reserve Chairman Jerome Powell began two days of testimony in which a strong rise in inflation was a prominent emphasis, U.S. market indexes were up, creeping into record territory. Despite recent record high job vacancies, the Fed chairman noted the labor market, while improving, still has a long way to go in rebounding from the pandemic.
On Wednesday, investors saw the 10-year Treasury yield drop and absorbed another round of quarterly results from the country’s top banking institutions. What is the current state of stock benchmarks?
The Dow Jones Industrial Average (DJIA) is a stock market index
DJIA,
0.18 percent increase
after briefly turning negative, was up 51 points, or 0.1 percent, at 34,937.
The S&P 500 index
SPX,
0.20 percent increase
After setting a new intraday all-time high of 4,393.68 towards the start of the day, the stock rose 10 points, or 0.3 percent, to 4,380.
The Nasdaq Composite Index (Nasdaq) is a stock market index
COMP,
minus 0.08 percent
After trading above its closing high of 14,733.24 on July 12, the stock gained 5 points, or less than 0.1 percent, to 14,682.
The Dow Jones Industrial Average dropped 107.39 points, or 0.3 percent, to 34,888.79; the S&P 500 index dropped 15.42 points, or 0.4 percent, to 4,369.21; and the Nasdaq Composite dropped 55.59 points, or 0.4 percent, to 14,677.65. The Russell 2000 index of small-capitalization companies
RUT,
1.35 percent decrease
What’s moving the market? It’s down 1.9 percent. On the first of two days of testimony before Congress on the status of the economy, loose monetary policies, surging U.S. housing prices, and the rising cost of living, all eyes were on Fed Chair Powell. Powell acknowledged that low interest rates and a scarcity of housing contributed to the affordability crisis, but added that the “reckless” and “irresponsible lending” practices that arose in the run-up to the 2008 financial crisis “are not happening, at least so far.” Powell also stated that talks regarding a possible path to gradually tapering the Fed’s asset-purchase program, which is presently worth $120 billion per month, will continue in the coming months. Concerns about inflation resurfaced on Wednesday after the June producer-price index came in higher than predicted, confirming that inflation is rising as the economy recovers from the COVID outbreak. Last month, the PPI increased by 1%, exceeding experts’ expectations of a 0.6 percent increase. The PPI data came after higher consumer price inflation data on Tuesday, which showed prices jumped 5.4 percent in the year to June, the highest rate since 2008, when oil hit a record $150 per barrel. In his semiannual presentation to lawmakers on Wednesday, the central bank director told the House Financial Services Committee that he was closely monitoring the current high pace of inflation and that “we would surely adjust our policy” if rising costs uprooted his expectations. The Treasury market has given them a vote of confidence, according to Robert Tipp, chief investment strategist at PGIM Fixed Income, in response to Powell’s pledges that the Fed will act, including hiking rates if necessary, if runaway inflation persists. According to MarketWatch, “we are over the top point of inflation worry, and Treasury rates should begin to look ahead” to a slower pace of inflation this year. Tipp’s earlier prediction that the benchmark Treasury yield will end 2021 below 1.5 percent, in part as the market adjusts to predictions of slower, longer-term growth, was backed up by Wednesday’s fall lower in the 10-year Treasury rate. Most Fed members have been unconcerned with the recent spike in inflation, with most officials, including Powell, viewing it as likely temporary. The CPI print, according to San Francisco Fed President Mary Daly, is just part of a temporary “pop” in inflation that won’t endure, and the central bank should keep its easy policy stance “steady in the boat.” Another source of concern has been the rise in COVID cases in the United States and around the world, owing to the highly transmissible delta form, which has fueled fears of unvaccinated adults infecting children. On Wednesday, corporate profits were also in the spotlight, with BlackRock being one of them.
BLK,
minus 3.31 percent
as well as Bank of America
BAC,
minus 3.20 percent
generating revenue and profit that exceeded expectations. Also in Washington, Senate Democrats announced late Tuesday that they had achieved an agreement on a budget that would spend $3.5 trillion over the next decade, paving the way for President Joe Biden’s push to invest government funds in climate change, healthcare, and family-service programs. Separately on Tuesday, a bipartisan group of senators continued to work on a third bill that would spend approximately $1 trillion on highways, water systems, and other infrastructure improvements, another Biden goal.
Bank of America Corp. stock.
BAC,
minus 3.20 percent
The moneycenter bank’s stock sank 3.6 percent on Wednesday after it reported a second-quarter profit that above estimates but revenue that fell short, owing to losses in the consumer banking and global markets sectors.
BlackRock Inc. is a private equity firm based in New York
BLK,
minus 3.31 percent
On Wednesday, the company announced second-quarter profit and revenue that exceeded forecasts, with assets under management increasing by 30% and net inflows above $80 billion.
Eli Lilly & Co. is a pharmaceutical company based in the United States. LLY said on Wednesday that it is acquiring the remaining shares of Protomer Technologies in a deal valued at more than $1 billion based on future development and commercial milestones.
Verso Corporation is a publishing company based in New York City. On Wednesday, VRS, a specialty and packaging paper and pulp producer, disclosed that Atlas Holdings LLC had made an unsolicited offer to buy the company for $20 per share in cash.
Sight Sciences Inc. is a company that specializes in the field of vision After the estimated pricing and quantity of shares to be offered in the California-based Ophthalmology and optometry company’s first public offering were boosted, SGHT is now scheduled to go public at a valuation of more than $1 billion.
Apple
AAPL,
2.66 percent increase
According to a Bloomberg News report published late Tuesday, the business ordered suppliers to increase manufacturing of its next-generation iPhones by 20%.
What about your other assets? How are they doing?
The 10-year Treasury note’s yield
TMUBMUSD10Y,
1.351 percentage point
The yield on the 10-year Treasury note declined 7 basis points to 1.36 percent.
The ICE U.S. Dollar Index DXY, which compares the currency to a basket of six major rivals, fell 0.4 percent.
Oil futures fell slightly, with the US benchmark CL00 down 2.9 percent at $73.05 a barrel. Gold futures GC00 gained 0.8 percent to settle at $1,825 per ounce.
The Stoxx 600 Europe SXXP finished 0.1 percent down in European markets. The FTSE 100 UKX in London fell 0.5 percent.
In Asia, Hong Kong’s Hang Seng Index HSI declined 0.6 percent, Shanghai’s Composite SHCOMP fell 1.1 percent, and Japan’s Nikkei 225 NIK finished 0.4 percent lower./n
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