Market Uncertainty Lingers After Powell’s Congressional Testimony

Wall Street experienced mixed outcomes on Tuesday as Federal Reserve Chair Jerome Powell’s testimony before Congress failed to provide new insights on the timeline for interest rate reductions. This left investors in a state of uncertainty.

The S&P 500 and Nasdaq composite each gained 0.1%, setting new records, while the Dow Jones Industrial Average fell by 52 points, or 0.1%. Helen of Troy, a consumer goods company, saw its shares plummet nearly 28% after reporting first-quarter earnings that missed forecasts.

Treasury yields rose slightly, with the 10-year Treasury note yield edging up to 4.29% from 4.28%. Banking stocks, including JPMorgan Chase and Bank of America, saw gains of 1.6% and 2.3% respectively, helping to offset declines in the tech sector, where Microsoft and Broadcom fell 1.6% and 1.5%.

Intel’s stock continued to climb, gaining 1.9% following a 6.2% increase on Monday, fueled by optimistic analyst predictions about the company’s upcoming processors for AI products.
Powell’s testimony did not provide clear signals on the timing of potential rate cuts, leading to a muted market response. Lisa Erickson of U.S. Bank Wealth Management noted, “The market is really seeing no surprises today and so that’s allowing it to modestly drift higher.”

The Federal Reserve has maintained high benchmark interest rates as it monitors inflation, which remains around 3% despite significant reductions over the past two years. Powell emphasized the risks of premature rate cuts, which could weaken economic activity and employment.

The economy has been supported by a strong jobs market and consumer spending, though the latter has slowed as inflation forces consumers to prioritize essential spending. Elevated borrowing costs have added to the financial strain on households.

Wall Street is eager for rate cuts this year to ease pressure on the economy. Experts forecast a possible rate cut in September. Powell’s upcoming testimony before the House Financial Services Committee and new inflation reports later this week are expected to provide further insights.

The government’s report on Thursday is expected to show a decline in consumer prices to 3.1% in June from 3.3% in May, with a wholesale inflation report anticipated on Friday.

Investors are also closely watching earnings reports from major companies. Delta Air Lines will announce its results on Thursday, followed by JPMorgan, Citigroup, and Wells Fargo on Friday, which could shed light on consumer debt trends and banking sector concerns.