US stocks finished higher on Wednesday after Federal Reserve Chairman Jerome Powell hinted that an interest rate cut could come soon.
The Nasdaq Composite hit a new closing record, surpassing last week’s all-time high. The S&P 500 fell just a few points short of a fresh record.
All three benchmarks hit intraday highs on Wednesday.
Gains were mostly driven by energy, telecommunications and technology stocks.
US oil futures settled 4.5% higher at $60.43 a barrel, their highest level in seven weeks. Tropical Storm Barry poses a threat to crude production in the Gulf of Mexico. And crude oil inventories declined last week, according to newly released data. Both factors are driving the price of oil higher
The US dollar is the world’s foremost reserve currency and that status is here to stay, at least for now, according to Federal Reserve Chairman Jerome Powell.
Asked about the greenback’s status during his testimony before the Financial Services Committee, Powell said “it’s hard to see the dollar not being the reserve currency for quite some time.”
That said, it was certainly possible to move from one reserve currency to another, or from one to multiple, the central banker added. However, it’s hard to see which other currency would be able to compete with the buck, at least in the near term, said Powell.
Part of the dollar’s appeal as a reserve currency is the United States’ fiscal stability, prosperity and rule of law. It’s also an open trading nation, Powell said. In the long-run, the high US government debt balance could be a concern, he added.
Alan Patricof, legendary venture capitalist and managing director at Greycroft, told CNN Business’ Richard Quest on the “Markets Now” live show that President Donald Trump’s trade policy has unsettled markets.
“It’s about trade policy, but it’s a broader thing: It’s uncertainty,” Patricof said. “Public markets don’t like uncertainty. They don’t like surprises.”
Patricof said markets get a dose of uncertainty “every day, every hour,” and the outcome is “we’re living in a world that is being fractionated.”
Alan Patricof, legendary venture capitalist and managing director at Greycroft, told CNN Business’ Richard Quest on the “Markets Now” live show that he hasn’t yet chosen his favorite candidate for president, but he believes America should choose a candidate who can beat President Donald Trump.
Patricof has long supported Democrats, but he said he sees a lack of passion from the current slate of two dozen presidential candidates.
“If you’re looking for me to say I’m looking for someone who is going to make us rich, that’s not what I’m going to say,” he said.
Biden is the “logical” choice to beat Trump, but he is “trying to stay on the sidelines.” He said he has met six to 10 candidates.
Apple thinks that it can solve its iPhone sales problem by selling services, like Apple Care, Apple Music, apps and games.
But there’s a problem with that strategy:
“Service revenue relies on hardware sales,” noted Jun Zhang, analyst at Rosenblatt Securities, who recently downgraded Apple to a rare “sell” rating, told CNN Business’ Richard Quest on the “Markets Now” live show.
Alan Patricof, legendary venture capitalist and managing director at Greycroft, disagrees.
“I take a much longer term view,” he said. “Apple is a company that’s here forever.”
He noted that no one can replace Apple Founder Steve Jobs, but he said CEO Tim Cook maintains a vision for Apple (AAPL).
“The whole genius bar, the whole idea of service going into Apple and getting your phone taken care of, the whole thing … I think it’s a long-term company,” he said. “If you have a long-term perspective, you want to invest in Apple.”
Federal Reserve Chairman Jerome Powell testified today that “crosscurrents” of trade and international economic struggles are blowing around the US economy. But some US traders are shrugging.
“Domestically, this economy is strong,” Alan Valdes, partner at Wall Street Capital Partners, told CNN Business’ Richard Quest on the “Markets Now” live show.
Walmart (WMT) is performing well, for example, despite tariffs. So that’s good news for the US economy.
“I don’t think people have seen an increase in prices at Walmart,” he said.
It would be a bad idea for the United States to return to the gold standard, Federal Reserve Chairman Jerome Powell told the House Financial Services Committee.
Judy Shelton, who President Donald Trump nominated to the Fed last week, is favoring the United States to go back to the gold standard.
“I do not share those views,” Powell said of Shelton’s stance, but stressed he wouldn’t comment on her nomination to the Fed.
For the United States to return to the gold standard, Congress would have to change the central bank’s mandate. At present, that is achieving maximum employment and stable prices.
Changing the Fed’s mandate to the price of gold per dollar is possible through monetary policy, but it would mean that other measures of the economy, like unemployment, would fluctuate, Powell said. That was why no country was using it anymore, he added.
The Unites States federal budget is on an “unsustainable path,” according to Federal Reserve Chairman Jerome Powell.
The government is spending faster than the economy is growing, so US debt as a percentage of GDP is at an unsustainable level, the central banker said during his hearing before the Financial Services Committee.
“We will wind up paying more interest” if the country continues on this path, Powell said, when that money could be spent on other things, such as educating the next generation.
At the end of the first quarter, government debt accounted for 104.6% of GDP, according to the St. Louis Fed.
Passing President Donald Trump’s revised North American trade pact would “remove uncertainty” about the outlook for the economy, Federal Reserve Chairman Jerome Powell said during his testimony before the Financial Services Committee.
The USMCA — the trade agreement between the United States, Mexico and Canada that would replace NAFTA — has yet to be passed by Congress. While market participants have spent more time focusing on the trade spat with China, removing the uncertainty around USMCA would likely soothe investor worries about trade, too.
If Congress doesn’t OK that trade agreement, though, Powell said there could be a lot of uncertainty about the future of NAFTA — particularly if that agreement is terminated without a replacement.
Friday’s better-than-expected jobs report didn’t change the Federal Reserve’s outlook, said Fed Chairman Jerome Powell.
“We look at a broad range of data,” Powell added.
In other words, a July interest rate cut remains on the table.
Market participants have grown concerned that a highly anticipated July interest rate cut was in jeopardy after the strong jobs report. After all, a strong economy wouldn’t need the stimulus from a rate cut.
Fed Chairman Jerome Powell said he wouldn’t quit his post at the helm of the central bank if President Donald Trump asked him to leave.
Financial Services Committee Chairwoman Maxine Waters, asked him, “If President Trump asked you to leave tomorrow,” would you do it? Powell responded a clear “no.”
“The law gives me a four-year term and I intend to serve that,” he said.
The Federal Reserve has set up a working group to address concerns related to Facebook’s Libra cryptocurrency, Chairman Jerome Powell said during his testimony.
While Powell acknowledged that he does “support reasonable innovation in the financial services industry,” he said that Facebook’s (FB) Libra “raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability.”
He said the Fed’s working group is collaborating with US regulatory agencies and the Treasury Department, as well as central banks around the world. The Treasury’s Financial Stability Oversight Council has also set up a staff-level working group to look at Libra, Powell said.
“The process of addressing these concerns, we think, should be a patient and careful one and not a sprint to implementation,” Powell said.
Federal Reserve Chairman Jerome Powell’s testimony before the Financial Services Committee has kicked off.
In her opening statement, Committee Chairwoman Maxine Waters said the hearing would address “the elephant in the room,” referring to President Donald Trump’s ongoing comments about monetary policy.
Last week, Trump said in a tweet that “our Federal Reserve doesn’t have a clue! They raised rates too soon, too often, & tightened, while others did just the opposite.” The president added that the most difficult problem for the United States wasn’t its competitors, but its central bank.
Levi Strauss (LEVI) shares fell more than 11% in early trading after posting a mixed earnings report late Tuesday.
The denim company said that its profit during the second quarter of 2019 fell 63% from the same period a year ago. It blamed that drop on elevated costs from its March IPO, such as underwriting fees to banks.
Despite falling short of investors’ profit forecasts, Levi’s sales during its previous quarter grew 5% compared with a year prior, including a gain of 9% in Europe and 6% in Asia.
Stocks are on a roll this morning thanks to Powell’s comments supportive of rate cuts.
The S&P 500 hit 3,000 points for the first time ever in the first half hour of trading.
The stock index earlier set a fresh intra-day all-time high. Its most recent closing record was Wednesday last week.
The S&P was last up 0.7%.
Central banks aren’t perfect, but they work best when politicians aren’t calling the shots. That pillar of monetary policy is now under siege.
President Donald Trump has repeatedly bullied Jerome Powell, his hand-picked central bank chief, into slashing interest rates. The Federal Reserve Chairman is likely to get asked about that during Wednesday’s hearing on Capitol Hill.
“Congress has given us an important degree of independence so that we can effectively pursue our statutory goals based on objective analysis and data,” Powell said in prepared remarks.
Turkish President Recep Tayyip Erdogan took his dislike for his country’s monetary policy to the next level over the weekend, firing his central bank chief.
Turkey is the poster child for what can happen when political leaders meddle with central banks. Years of pressure from Erdogan limited the central bank’s willingness to cool off the red-hot economy by raising rates. That led to higher inflation that the central bank only belatedly tried to tackle.
“Under President Erdogan, the credibility of monetary policy has been severely undermined,” said Jason Tuvey, senior emerging market economist at Capital Economics.
US stocks bounced higher at the opening bell on Wednesday after Federal Reserve Chairman Jerome Powell added fuel to hopes for a near-term interest rate cut to boost the US economy.
In prepared remarks for the first day of his bi-annual congressional testimony, Powell pointed at below-target inflation and crosscurrents including trade uncertainties and global growth. The market took this to mean a rate cut could happen later this month, and stocks rallied.
Levi’s (LEVI) reported after the bell on Tuesday, missing expectations. Its shares dropped 9.7% at the open.
Bed Bath & Beyond (BBBY) is due for results after the close. Its shares opened little changed.
The Federal Reserve just set off some post-July 4 fireworks on Wall Street.
Dow futures soared on Wednesday morning after Fed chief Jerome Powell strongly hinted at rate cuts in prepared remarks.
“Bottom line, Jay Powell fully endorsed the July rate cut and did absolutely nothing to pull the markets back from that expectation,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.
Boockvar noted that in Powell’s testimony, the Fed chief warned that “uncertainties about the outlook have increased” and “weakness” in foreign economies could impact the United States. Powell also said that inflation pressures “remain muted,” implying the central bank has room to lower rates.
The negative comments from the Fed come despite some positive developments, including the US-China trade truce and the robust June jobs report.
Powell’s dovish remarks sent the 10-year Treasury yield plummeting from 2.10% to 2.04%.
Even before Powell, Wall Street was pricing in a 100% chance of a rate cut at the Fed’s July 31 meeting. But now the odds of a larger cut of half a percentage point have increased to 16%, compared with just 3% on Tuesday, according to the CME FedWatch Tool.
Markets lack direction ahead of Powell’s remarks.
US stock futures point lower. The Dow is set to fall 40 points, or 0.2%. The Nasdaq and S&P 500 are set for similar losses.
European markets opened mixed. Britain’s FTSE 100 rose 0.1%, while France’s CAC 40 and Germany’s DAX slipped.
Hong Kong’s Hang Seng rose 0.3%, but the Shanghai Composite and Japan’s Nikkei shed 0.2%.
The Dow Jones industrial average closed down 0.1% on Tuesday. The S&P 500 increased 0.1%, and the Nasdaq was rose 0.5%.
