Fed Chairman talks about U.S. stocks slightly higher after continued stimulus measures | Wall Street Journal Coronavirus Pandemic News


The Standard & Poor’s 500 index closed slightly higher after Fed Chairman Jerome Powell reiterated in his congressional testimony on Wednesday that the US economic recovery has not yet progressed enough to begin to reduce the scale of asset purchases.

after Bloomberg

Large technology stocks led the rise in the S&P 500 index and bond yields fell. As investors turned to defensive stocks, Federal Reserve Chairman Jerome Powell (Jerome Powell) put forward reasons for maintaining economic stimulus measures.

The Standard & Poor’s 500 index closed slightly higher. Powell emphasized in testimony to Congress that the US economic recovery has not made enough progress to start reducing the scale of asset purchases.

Apple, Google’s parent company Alphabet and Microsoft all set record highs. Bank of America fell after failing to impress investors in the second quarter, while Wells Fargo rose.

The 10-year U.S. Treasury bond yield fell below 1.4%, and the U.S. dollar fell. Powell added that inflation may remain high in the coming months before it slows down.

“This supports our view that the Fed wants the economy to overheat and will tolerate recent inflationary overshoots,” said Steven Richuto, chief economist of the United States at Mizuho Americas.


An earlier report showed that prices paid to US producers in June rose more than expected, indicating that companies are under increasing pressure to pass on higher costs to consumers.

The June US consumer inflation data released on Tuesday surpassed all forecasts and indicated higher costs associated with the reopening of the pandemic. Powell reiterated that Fed officials expect this pressure to be temporary, but some commentators believe that there is a longer-term risk of raising interest rates, which may force the stimulus plan to be cut faster than expected.

“The Federal Reserve is still highly concerned about the employment situation,” said Rose Mayfield, an analyst at Baird Investment Strategy. “Therefore, although part of the economic recovery has been fully completed and even exceeded the level before the epidemic, we still lack about 7 million non-agricultural employment before the pandemic. The labor force participation rate is low, and the unemployment rate is higher than 4-5%. The Fed will remain accommodative. But there is no doubt that inflation data is starting to get them into trouble.”

Global stock markets are still close to record levels, and a series of other factors are affecting the outlook. They include the spread of the more contagious variant of the Covid-19 delta, the possibility of peak revenue and economic growth, and fiscal spending plans in the United States.

As gasoline and distillate inventories increased and US production increased during the peak summer demand period, oil prices fell.

Here are some events worth watching this week:

  • Bank of Korea currency decision on Thursday
  • The Bank of Japan’s interest rate decision on Friday

The following are some of the main trends in the financial market:

stock

  • As of 4:05 pm New York time, the S&P 500 Index rose 0.1%
  • Nasdaq 100 Index up 0.2%
  • Dow Jones Industrial Average rose 0.1%
  • MSCI World Index has not changed much

currency

  • Bloomberg U.S. dollar spot index fell 0.5%
  • Euro rose 0.5% to 1.1835 USD
  • British pound rose 0.3% to 1.3859 US dollars
  • The yen rose 0.6% to 109.97 against the dollar

Bond

  • The 10-year U.S. Treasury bond yield fell by 7 basis points to 1.35%
  • German 10-year government bond yields fell 3 basis points to -0.32%
  • The yield on the UK 10-year Treasury bond has hardly changed, at 0.63%

commodity

  • West Texas Intermediate crude oil fell 3.4% to US$72.72 per barrel
  • Gold futures rose 1% to $1,828.20 per ounce





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