Stocks ended mixed Tuesday, with the S&P 500 and the Nasdaq both closing again at fresh record highs, as investors looked to the first of two key appearances on Capitol Hill from Federal Reserve Chairman Jerome Powell.
The Dow Jones Industrial Average slipped 0.13%, or 52 points, to end the session at 39,291.97, while the S&P 500 gained 0.07% to close at 5,576.98 and the tech-heavy Nasdaq gained 0.14% to end at 18,429.29.
The S&P 500 and the Nasdaq closed at record highs and posted their sixth straight day of gains.
Fed Chair Powell told lawmakers that, following Fed-administered stress tests from earlier in the year, the banking sector remains on a “strong financial footing” heading into the second half of the year.
“We are well aware that we now face two-sided risks,” and can no longer focus solely on inflation, Powell told the Senate Banking Committee, Reuters reported. “The labor market appears to be fully back in balance.”
Jeffrey Roach, chief economist at LPL Financial, said in the firm’s 2024 Midyear Outlook, “Still Waiting for the Turn” that “economic growth has continued to surprise to the upside.”
“The U.S. economy has continued to exhibit remarkable resilience, growing beyond expectations despite facing high inflation and other late-cycle pressures,” he said. “However, the Outlook indicates a potential slowdown, with consumer spending expected to decelerate and labor market conditions to soften by the end of the year.”
Updated at 12:02 PM EDT
Holding gains
The S&P 500 is holding its earlier gains heading into the mid-day session, and was last marked 11 points higher, or 0.2%, after hitting an intra-day high of 5,588.66 in late morning trading.
The Nasdaq, meanwhile, was last seen 45 points, or 0.45% to the upside while the Dow slipped 45 points lower thanks in part to weakness in Salesforce (CRM) , McDonald's (MCD) and IBM (IBM) .
Related: Top Wall Street analyst issues stark warning for stocks
Updated at 11:05 AM EDT
Bank on it
Fed Chair Powell told lawmakers that, following Fed-administered stress tests from earlier in the year, the banking sector remains on a 'strong financial footing' heading into the second half of the year.
The Fed said on June 26 that all of the thirty-one banks its tested were able to withstand a hypothetical scenario of surging unemployment and a collapse in real estate prices, paving the way for increased dividends and buybacks.
JPMorgan (JPM) , Wells Fargo (WFC) and Citigroup (C) will kick-off the bank earnings season on Friday, with analysts looking for the sector to contribute around $88.2 billion in collective profits, an 8.8% increase from the same period last year.
Powell says the Fed is "very conscious" of comments that came in from a variety of banks and members of the public. Adds that the "strong" view of the Fed is that a re-proposal is "essential."
— Kyle Campbell (@ByKyleCampbell) July 9, 2024
Updated at 10:08 AM EDT
Dual risks
Fed Chairman Jerome Powell told lawmakers on the Senate Banking Committee that "elevated inflation is not the only risk we face", adding in prepared remarks for his semi annual testimony that "reducing policy restraint too late or too little could unduly weaken economic activity and employment."
"After a lack of progress toward our 2% inflation objective in the early part of this year, the most recent monthly readings have shown modest further progress," Powell said. "More good data would strengthen our confidence that inflation is moving sustainably toward 2%."
One rarely sees central bankers address Central Bank Independence outside of academic settings or policy wonk gatherings. Powell carefully took note to remind all about the Fed's instrumental independence. Given the upcoming Presidential election this is a lot more important than…
— Joseph Brusuelas (@joebrusuelas) July 9, 2024
Updated at 9:37 AM EDT
Record open
The S&P 500 hit a fresh all-time peak in early trading, and was last marked 12 points higher, or 0.22%, in the opening minutes of trading.
The tech-focused Nasdaq added 68 points, or 0.37%, to lodge its own new record peak, while the Dow slipped 58 points, or 0.15%.
S&P 500 Opening Bell Heatmap (Jul. 09, 2024)$SPY +0.25%🟩$QQQ +0.48%🟩$DJI -0.10%🟥$IWM -0.40%🟥 pic.twitter.com/Wz4krJ4XWd
— Wall St Engine (@wallstengine) July 9, 2024
Stock Market Today:
Fed Chair Powell, who will make a prepared statement and take questions today from the Senate Banking Committee, is expected to reiterate the Fed's view that more data are needed before officials can find confidence that inflation is returning to the central bank's 2% target and begin cutting interest rates.
Labor market data may prove to be the key factor in the Fed's decision-making, however, following last Friday's June jobs report, which showed solid new hiring of 206,000 but slowing wage gains and big downward revisions to the prior month's tallies.
Image source: Graeme Jennings-Pool/Getty Images
The National Federation of Independent Business, meanwhile, reported Tuesday that companies continue to find it difficult to fill jobs in unskilled sectors, but see some loosening in the market for those with higher levels of expertise.
Related: Analyst revamps S&P 500 target ahead of CPI inflation report
Traders are still pricing in little chance of a rate move from the Fed later this month in Washington, but they see the odds of a cut in September at around 77%, according to the CME Group's FedWatch.
Benchmark Treasury bond yields are starting to reflect that optimism, as well, with 10-year notes down around 6 basis points from the start of the month to around 4.286% heading into the start of the New York trading session>
At the same time, 2-year notes are pegged at 4.626% ahead of a $58 billion auction of 3-year notes later in the session.
That's giving another boost to stocks, which are set to extend their record run at the opening bell with a 12 point gain for the S&P 500 and a 66 point advance for the tech-focused Nasdaq.
The Dow Jones Industrial Average, meanwhile, is priced for a more modest 33 point bump at the start of trading.
Stocks on the move include Intel (INTC) , which has bounced more than 10% over the past four sessions and is marked 3.4% higher in premarket trading at $35.16.
More Wall Street Analysts:
- Analyst revisits Nvidia stock price target after Blackwell checks
- Analysts prescribe new Walgreens stock price targets after earnings
- Analyst revises Facebook parent stock price target in AI arms race
In overseas markets, stocks in Europe edged lower in early trading, with the Stoxx 600 down 0.11% and the FTSE 100 little changed from yesterday's close. Bond markets digested the impact of France's weekend elections on relations between Paris and the broader European Union.
Overnight in Asia, last night's rally on Wall Street, as well as a modest easing in the yen, helped the Nikkei 225 rise 1.96% to a record 41,580.17 points, while the regional MSCI ex-Japan benchmark gained 0.43% into the close of trading.
Related: Veteran fund manager sees world of pain coming for stocks
