US Stocks Recover Lost Ground After Powell’s Testimony

The Fed chair stated the same position of the governing board as he has previously, last FOMC and comments. He reiterated that the Fed’s decisions would be solely based on economic data. And that those decisions would be focused on aiming for maximum employment and the inflation target of 2%

These comments came after the House Financial Services Committee Chairman quizzed Powell about the central bank’s plans in an election year. Cutting rates in the run-up to the election may favor the incumbent in the White House.

Powel also mentioned again that the Fed “would like to see more data that confirm and make us more confident that inflation is moving sustainably down to 2%” before reducing the policy rate. And also that interest rate cuts may “likely be appropriate” later this year, “if the economy evolves broadly as expected.”

I would say the market liked this last comment the most, despite the Fed chair also clearly stating the central bank needed to see more data on price stability before cutting interest rates.

The Nasdaq was up 1.04 % and the $SPX was up 0.31% at the time of writing. JOLTS Job Openings data was released lower than expected. The number was released at 8.863 million compared to a consensus of 8.9 million.

The stock market didn’t give the job opening data much value. What does seem to have impacted the market more is the testimony from Powell. The stock market is driven by the upcoming pivot point.

Powell has never really given any hints at the timing and repeatedly stated there are just as many risks from cutting rates too early as there are from cutting them too late. Yet the stock market particularly likes the fact that time is in its favor, and prices are advancing at a slower rate.

To add to the mix the economy is still expanding, but not too much, which should help with keeping inflation in check, but employment high. Ultimately the market is still gambling on a soft landing.

The Fed chair stated the same position of the governing board as he has previously, last FOMC and comments. He reiterated that the Fed’s decisions would be solely based on economic data. And that those decisions would be focused on aiming for maximum employment and the inflation target of 2%

These comments came after the House Financial Services Committee Chairman quizzed Powell about the central bank’s plans in an election year. Cutting rates in the run-up to the election may favor the incumbent in the White House.

Powel also mentioned again that the Fed “would like to see more data that confirm and make us more confident that inflation is moving sustainably down to 2%” before reducing the policy rate. And also that interest rate cuts may “likely be appropriate” later this year, “if the economy evolves broadly as expected.”

I would say the market liked this last comment the most, despite the Fed chair also clearly stating the central bank needed to see more data on price stability before cutting interest rates.

The Nasdaq was up 1.04 % and the SPX was up 0.31% at the time of writing. JOLTS Job Openings data was released lower than expected. The number was released at 8.863 million compared to a consensus of 8.9 million.

The stock market didn’t give the job opening data much value. What does seem to have impacted the market more is the testimony from Powell. The stock market is driven by the upcoming pivot point.

Powell has never really given any hints at the timing and repeatedly stated there are just as many risks from cutting rates too early as there are from cutting them too late. Yet the stock market particularly likes the fact that time is in its favor, and prices are advancing at a slower rate.

To add to the mix the economy is still expanding, but not too much, which should help with keeping inflation in check, but employment high. Ultimately the market is still gambling on a soft landing.