Wall Street was more hesitant in early trading but remained close to its highs. The Nasdaq gained 0.40% to 18,477 points and the S&P 500 advanced 0.25% to 5,587 points. The Dow Jones, on the other hand, gave back 0.21% to 39,264 points. In remarks prepared for his hearing before the Senate Banking Committee, Jerome Powell indicated that the economy has made considerable progress toward the 2% inflation target set by the Federal Reserve, while labor market conditions have cooled but remained solid. Given these developments, the risks to achieving our employment and inflation goals are becoming more balanced.”
But the leader also said that “more reliable data would strengthen our confidence in the sustainable evolution of inflation towards 2%. We continue to make decisions meeting by meeting.” He said that cutting interest rates too little or too late could endanger the economy and the labor market. Conversely, cutting rates too quickly or too much could stall or reverse the rise in inflation.
According to the Fedwatch barometer, investors are betting more than 75% on a quarter-point interest rate cut in September. Ian Lyngen of BMO Capital Markets tells Bloomberg: “The tone of Powell’s prepared remarks is consistent with the recent emphasis on the employment component of the Fed’s dual mandate. While we don’t interpret this as an insinuation that July could potentially see a cut, it certainly leaves September on the table.”
Stephen Brown at Capital Economics says Powell is keeping all options open. “The neutral tone of the opening statement seems at odds with the softer tone of recent activity data, so we feel a September rate cut remains very much on the cards. The Fed is looking for more good data to bolster that confidence, a deliberately vague term that keeps all options open. We continue to expect two 25-basis-point rate cuts this year, in September and December.”
US Treasury Secretary Janet Yellen will also testify later today before the House Financial Services Committee, while Fed Vice Chair for Supervision Michael Barr and Governor Michelle Bowman will also speak. Traders are also keeping an eye on US political news as Joe Biden’s candidacy becomes more controversial than ever.
The euro/dollar parity reached $1.0816. A barrel of Brent crude was trading at $85.5. An ounce of gold was trading at $2,362 and Bitcoin rose 3.4% to $57,630 on Coindesk. Finally, the ten-year Treasury yield rose 2.7 bp to 4.307%.
Values
* Boeing (-0.3%). A United Airlines plane lost a landing gear wheel Monday while taking off from Los Angeles but landed safely in Denver, its intended destination. The wheel from the Boeing 757-200 on United Flight 1001 was recovered in the California city. No one was reported injured, an airline spokesman said. The Federal Aviation Administration on Monday also ordered inspections of 2,600 Boeing 737s because passenger oxygen masks may not work in an emergency. There have been several reports of oxygen generators moving around, a problem that could result in the inability to deliver oxygen to passengers if the plane loses pressure. Boeing issued a notice to airlines on June 17 asking them to conduct visual inspections, according to the FAA.
* JP Morgan (+0.5%). The US Federal Reserve is considering changing the rules for calculating systemic overload applied to the country’s eight largest banks, allowing them to save billions of dollars in capital.
* KKR (-0.7%). The private equity firm is considering selling half of its 43% stake in Japanese semiconductor equipment maker Kokusai Electric, according to two sources familiar with the matter cited by ‘Reuters’.
* Johnson & Johnson (+0.8%). US group Emergent BioSolutions said Johnson & Johnson had agreed to pay $50 million to settle claims related to the end of a contract to manufacture its Covid-19 vaccine.
* Eli Lilly (+1%). The publication of a data analysis shows that the American group’s treatment against obesity, Mounjaro, leads to faster and more significant weight loss than that of its competitor Novo Nordisk.
* Pfizer (-2%) announced that its scientific director, Mikael Dolsten, who played a key role in the development of the group’s vaccine against Covid-19, would be leaving his position after more than 15 years of career within the laboratory.
