Dow erases early loss as investors assess economic data, Powell testimony

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By William Watts and Mark DeCambre

Stocks were putting in a mixed performance Thursday, with the Dow Jones Industrial Average erasing a small early loss to test positive territory as investors weigh mostly upbeat economic data, corporate earnings reports, and a second day of testimony by Federal Reserve Chairman Jerome Powell.

How are stock benchmarks trading?

On Wednesday (link), the Dow rose 44.44 points, or 0.1%, ending at 34,933.23; the S&P 500 index gained 5.09 points, or 0.1%, closing at 4,374.30; while the Nasdaq Composite Index shed 32.70 points, or 0.2%, finishing at 14,644.95.

What’s driving the market?

Stocks struggled to find direction after a round of mostly upbeat economic data, including a fall in new applications for unemployment benefits to a new pandemic low (link). Initial jobless claims fell by 26,000 to 360,000 in the seven days ended July 10, matching the forecast of economists polled by The Wall Street Journal.

Powell, in an appearance before the Senate Banking Committee, repeated his message from the previous day when he testified before a House panel, telling lawmakers that inflation has risen significantly and would likely remain high for a few months before moderating.

Powell said Wednesday that, with expectations that pricing pressures will eventually fade, the central bank was in no hurry to pare purchases of Treasurys and mortgage-related assets, which are currently running at $120 billion monthly, and described the economy as “still a ways off” from meeting the Fed’s self-described goals of “substantial further progress.”

Powells’ remarks showed that concerns about a “hawkish shift in tenor” at the Fed’s June policy meeting were overblown, said Andrew Schneider, U.S. economist at BNP Paribas, in a note.

“While the Fed has begun ‘thinking about’ tapering, we believe its bias remains for a prudent and patient policy approach, with the Fed largely welcoming signs of more sustained inflation and labor market recovery,” he wrote.

How long pricing pressures will persist is perhaps the big question dogging financial markets presently.

“These nagging concerns about inflation, transitory or otherwise have continued to dominate sentiment, while worries over the pace and persistence of rising prices, appear to be tempering optimism over the wider global recovery story,” wrote Michael Hewson, chief market analyst at CMC Markets UK, in a Thursday research note.

In other economic data, the Philadelphia Fed’s factory index fell (link)to 21.9 in June from 30.7 in prior month. Separately, the New York Fed’s Empire State Index jumped 25.6 points to a record-high reading of 43 (link) in July. Economists had expected a reading of 17.3, according to a survey by The Wall Street Journal. Any reading above zero for either index indicates improving conditions.

U.S. industrial production rose 0.4% in June (link), the Federal Reserve reported Thursday, but a shortage of semiconductors contributed to a 6.6% drop in production of motor vehicles and parts. Excluding autos, industrial output rose 0.8% in the month.

Meanwhile, the spread of the delta variant of coronavirus was also stoking anxieties on Wall Street. Dr. Francis Collins, director of the National Institutes of Health told CNN Wednesday that the “delta variant is spreading, people are dying, we can’t actually just wait for things to get more rational.”

“We’re losing time here,” the public health professional said as the U.S. vaccine program has slowed with 48.2% of the population fully inoculated, according to a tracker from the Centers for Disease Control and Prevention.

Which companies are in focus?

How are other markets trading?

-William Watts; 415-439-6400; AskNewswires@dowjones.com

 

(END) Dow Jones Newswires

07-15-21 1126ET

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