Stocks hovered near record highs on Tuesday as Federal Reserve Chair Jerome Powell’s testimony reassured investors that the central bank is unlikely to change its current outlook on interest rates this year.
Key Takeaways
- Federal Reserve Chair Jerome Powell’s testimony provided no new signals on interest rate cuts.
- Major stock indices remained close to record highs.
- Market participants are anticipating a potential interest rate cut in September.
Powell’s Testimony and Market Reaction
Federal Reserve Chair Jerome Powell delivered the first of two days of semiannual testimony before Congress on Tuesday. Speaking to the Senate, Powell reiterated the key conclusions from the Federal Open Market Committee’s (FOMC) June meeting, which helped keep the stock market buoyant.
Powell’s written testimony was largely a repeat of the June FOMC statement, indicating no immediate plans for monetary easing. However, some analysts believe that Powell may signal a policy change at the upcoming Jackson Hole symposium in late August.
Market Performance
At the closing bell, the broader S&P 500 inched up 0.07% to 5,577, while the tech-heavy Nasdaq Composite gained 0.1% to 18,429. The blue-chip Dow Jones Industrial Average was slightly down by 0.1% at 39,292.
Future Rate Cuts
Market participants are eagerly awaiting the Fed’s first quarter-point cut, which would bring interest rates down from a 23-year high. Futures traders have assigned a 70% probability to the FOMC enacting its first cut to the federal funds rate in September, up from 63% a week ago.
Upcoming Economic Data and Earnings
Powell will continue his testimony before the House on Wednesday, where he is expected to face more questions about inflation. The next Consumer Price Index (CPI) report, due on Thursday, will provide further insights into inflation trends.
On the earnings front, Delta Air Lines is set to report on Thursday, followed by JPMorgan Chase and Citigroup on Friday. Analysts are closely watching these reports for indications of how high interest rates are affecting different sectors.
Tesla’s Winning Streak
Tesla stock notched its 10th consecutive win, supported by better-than-expected deliveries in the second quarter. The stock is now up more than 40% over the past 10 sessions and 6% for the year-to-date, contributing significantly to the Nasdaq-100 index.
Conclusion
Jerome Powell’s testimony has provided a sense of stability to the markets, keeping major indices near record highs. Investors are now looking forward to upcoming economic data and earnings reports for further direction.
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