Wall Street Closes Mixed After Powell’s Testimony Leaves Unanswered Questions

Wall Street closed with mixed results on Tuesday following Federal Reserve Chair Jerome Powell’s testimony before Congress, which provided little new information about the Fed’s plans for interest rate adjustments.

The S&P 500 and Nasdaq composite both rose 0.1%, reaching new records, while the Dow Jones Industrial Average dropped by 52 points, or 0.1%. Helen of Troy saw its stock tumble nearly 28% after disappointing first-quarter earnings.

In the bond market, Treasury yields increased slightly, with the yield on the 10-year Treasury note rising to 4.29% from 4.28%. Banking stocks like JPMorgan Chase and Bank of America posted gains of 1.6% and 2.3% respectively, offsetting declines in tech stocks, including Microsoft and Broadcom, which fell 1.6% and 1.5%.

Intel’s stock continued its upward trend, gaining 1.9% after a 6.2% increase on Monday, driven by positive analyst outlooks for its future processors.

Powell’s testimony did not clarify the timeline for potential interest rate cuts, leading to a cautious market response. Lisa Erickson of U.S. Bank Wealth Management commented, “The market is really seeing no surprises today and so that’s allowing it to modestly drift higher.”

The Federal Reserve has kept interest rates high as it waits for more signs of cooling inflation. While inflation has decreased over the past two years, it remains around 3%, continuing to impact consumers, particularly those with lower incomes.

Powell highlighted the dangers of premature rate cuts, warning that they could weaken economic activity and employment. The economy has been supported by a strong labor market and consumer spending, though the latter has slowed due to inflation and higher borrowing costs.

Wall Street is hoping for rate cuts this year to alleviate economic pressures. Experts anticipate a rate cut in September. Powell’s next testimony before the House Financial Services Committee and upcoming inflation reports will be closely watched for further guidance.

The latest government report, due Thursday, is expected to show a decline in consumer prices to 3.1% in June from 3.3% in May. A report on wholesale inflation is expected on Friday.

Investors are also looking forward to earnings reports from major companies, with Delta Air Lines set to report on Thursday, followed by JPMorgan, Citigroup, and Wells Fargo on Friday, which may provide insights into consumer debt levels and the health of the banking sector.

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