On conflicting fears and buoyant PPI, the US equity rally fades.
Before any policy changes, Powell says, “a lot of notice” will be given.
As the BOC taper continues, the hawkish RBNZ puts market bulls to the test.
Despite missing earnings predictions, US banks remain confident.
On Wednesday, US markets finished mixed, reversing early-day gains, as bulls evaluate Powell’s optimism in the face of conflicting signals and data.
Read: Powell pushes the dollar down in today’s forex market
In his bi-annual testimony, Fed Chair Jerome Powell stated that “a lot of notice” would be given before altering monetary policy. The central banker also indicated that the US economic recovery is still in its early stages, while maintaining a “temporary” inflation outlook. Equities rose after his remarks, but the US Producer Price Index (PPI) for June showed that upside momentum was still intact. However, US 10-year Treasury yields fell 6.6 basis points on Wednesday, marking the steepest decrease in a week, finishing at 1.35 percent.
Markets were also hampered by looming uncertainty over US President Joe Biden’s stimulus proposal, despite Reuters reporting that Democrats were ready to agree to a $3.5 trillion deal. Stocks were also pulled down by worsening virus conditions and further tightening of monetary policy by the Bank of Canada (BOC), as well as suggestions of tapering by the Reserve Bank of New Zealand (RBNZ).
The Dow Jones Industrial Average (DJI) and the S&P 500 both ended the day with minor increases, up 0.13 percent and 0.12 percent, respectively, to 34,933.23 and 4,374.38. It’s worth noting that the S&P 500 reached a new high of 4,393.68. Nasdaq, on the other hand, fell 0.22 percent, or 32.7 points, to 14,645.
In company-specific news, American Airlines rose over 3% amid optimism about the economy, but Peloton had to bear the brunt of the Wedbush downgrade. Furthermore, Bank of America (BofA), Citigroup (Citigroup), and Barclays (Barclays) manage to print profits in Q2 2021 despite using reserves, while maintaining optimism for the next earnings release.
Investors will be watching Powell’s testimony 2.0 in the coming weeks for further clarity on the stimulus and the conditions for a new surge./n
