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A mixed close in the markets today — albeit most major indexes hovering right around break-even — reflects the deliberations of Fed Chair Jay Powell’s comments on Capitol Hill. Earnings results for Q2 thus far have been predictably positive, especially considering historically low base effects from last year’s pandemic conditions. The Dow and S&P 500 were up 0.13% and 0.12%, respectively, while the Nasdaq fell -0.22%. The Russell 2000 dropped -1.63%.
Chairman Powell fielded questions from House representatives today, in which he insisted that it is only a small group of goods and services demonstrating much higher inflation, and that the labor market still has “a long way to go.” Powell and the Fed have proven fairly prescient to this point, holding back from making monetary policy shifts as new data brings evidence of inflation which have shown some wavering aspects over the past couple weeks.
Still, many investors are growing a little nervous that continued inaction to combat inflation — by tapering asset buybacks first, raising interest rates second — will allow inflation to take over the U.S. economy. From Powell’s perspective, with unemployment still hovering at 5.9%, this side of the Fed’s dual mandate looks to take increased importance at this stage. Wages are growing and hires are being made; Powell sees this as a good thing, not a problem.
The Fed’s Beige Book was also released today (during Powell’s testimony in Washington DC), acknowledging inflation apparent in rising prices across industries. Only some, the report stated, were able to pass through costs to consumers; the rest saw their margins cut into via higher input costs without the ability to stay competitive rising prices. Powell’s testimony today would suggest he believes the overall economy can handle such headwinds.
Q2 earnings season continues tomorrow before the opening bell, with finance companies Morgan Stanley (MS - Free Report) and U.S. Bancorp (USB - Free Report) being joined by UnitedHealth (UNH - Free Report) , Taiwan Semiconductor (TSM - Free Report) and Progressive (PGR - Free Report) . So far so good for Q2 earnings: Zacks Director of Research Sheraz Mian says the 30 S&P 500 companies already having reported are up 244% on the bottom line, 14% on the top.
In addition, Thursday morning’s weekly jobless claims will greet us ahead of the open. Also Import/Export Prices, Empire State and Philly Fed surveys, and Industrial Production and Capacity Utilization. Powell’s testimony concludes Thursday, as well. By the end of just this first week of earnings season, we are likely to have a fairly articulated road map for the weeks and months ahead.
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Mixed Close on Q2 Earnings, Powell Testimony
A mixed close in the markets today — albeit most major indexes hovering right around break-even — reflects the deliberations of Fed Chair Jay Powell’s comments on Capitol Hill. Earnings results for Q2 thus far have been predictably positive, especially considering historically low base effects from last year’s pandemic conditions. The Dow and S&P 500 were up 0.13% and 0.12%, respectively, while the Nasdaq fell -0.22%. The Russell 2000 dropped -1.63%.
Chairman Powell fielded questions from House representatives today, in which he insisted that it is only a small group of goods and services demonstrating much higher inflation, and that the labor market still has “a long way to go.” Powell and the Fed have proven fairly prescient to this point, holding back from making monetary policy shifts as new data brings evidence of inflation which have shown some wavering aspects over the past couple weeks.
Still, many investors are growing a little nervous that continued inaction to combat inflation — by tapering asset buybacks first, raising interest rates second — will allow inflation to take over the U.S. economy. From Powell’s perspective, with unemployment still hovering at 5.9%, this side of the Fed’s dual mandate looks to take increased importance at this stage. Wages are growing and hires are being made; Powell sees this as a good thing, not a problem.
The Fed’s Beige Book was also released today (during Powell’s testimony in Washington DC), acknowledging inflation apparent in rising prices across industries. Only some, the report stated, were able to pass through costs to consumers; the rest saw their margins cut into via higher input costs without the ability to stay competitive rising prices. Powell’s testimony today would suggest he believes the overall economy can handle such headwinds.
Q2 earnings season continues tomorrow before the opening bell, with finance companies Morgan Stanley (MS - Free Report) and U.S. Bancorp (USB - Free Report) being joined by UnitedHealth (UNH - Free Report) , Taiwan Semiconductor (TSM - Free Report) and Progressive (PGR - Free Report) . So far so good for Q2 earnings: Zacks Director of Research Sheraz Mian says the 30 S&P 500 companies already having reported are up 244% on the bottom line, 14% on the top.
In addition, Thursday morning’s weekly jobless claims will greet us ahead of the open. Also Import/Export Prices, Empire State and Philly Fed surveys, and Industrial Production and Capacity Utilization. Powell’s testimony concludes Thursday, as well. By the end of just this first week of earnings season, we are likely to have a fairly articulated road map for the weeks and months ahead.
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