Wall Street’s main indexes had a choppy start to trading on Tuesday, advancing after earlier declines as investors weight testimony from Federal Reserve Chair Jerome Powell.
The S&P 500 and Nasdaq clawed back from morning drops, building on a comeback that began late Monday.
Federal Reserve Chairman Jerome Powell told Congress in his confirmation testimony on Tuesday that if the pace of price increases fails to slow, the central bank will get more aggressive with raising short-term borrowing costs.
Worries over sooner-than-expected interest rate hikes have tempered investors’ optimism heading into the new year, placing equity markets in a risk-off mood so far in 2022. Meanwhile, Treasury yields have climbed, with the benchmark 10-year yield topping 1.8% to reach its highest level since January 2020.
“We’re seeing across the board a re-rating of what the Federal Reserve will do,” Steven Wieting, global chief investment strategist at Citi Private Bank told Yahoo Finance Live.
“The likelihood is very clear that the Fed will succeed in sinking inflation,” Wieting said. “That was going to happen one way or the other and we are just trying to gather how actively the Fed will be doing that.”
Goldman Sachs, Evercore ISI, and Deutsche Bank are now among Fed watchers repricing the Federal Reserve’s pace on rate hikes. The firms recently predicted short-term interest rates will be 100 basis points higher by the end of 2022 than where they are now.
“We revise our Fed outlook again given plummeting unemployment, strong wages, and anticipation of another hot inflation print,” said Evercore ISI’s Krishna Guha in a note.
In an interview with CNBC on Monday, JPMorgan Chief Executive Officer Jamie Dimon said he hoped for a “soft landing,” by the central bank as it gets ready to begin raising its benchmark federal funds rate in March.
“It’s going to be a little bit like threading a needle,” said Dimon, though adding that it was possible inflation is worse than the Fed believes and rates could be increased more than currently anticipated.
“I’d personally be surprised if it’s just four increases,” Dimon said. “Four increases of 25 basis points is a very, very little amount, and very easy for the economy to absorb.”
The central bank’s monetary policy will remain in focus this week, with the Bureau of Labor Statistics' (BLS) latest Consumer Price Index (CPI) in the spotlight as investors continue to gauge inflationary pressures and the Fed’s potential response.
Another red-hot read on the latest number is expected, with economists forecasting a print of 7.1% in December based on Bloomberg consensus data, up even more from November's 6.8% year-over-year clip.
Bank earnings are also underway, with BlackRock (BLK), Citigroup (C), JPMorgan Chase (JPM), and Wells Fargo (WFC) set to report fourth-quarter results before market open on Friday.
11:27 a.m. ET: S&P 500 recoups earlier losses, Nasdaq climbs to session high
Here were the main moves in markets as of 11:27 a.m. ET:
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S&P 500 (^GSPC): +9.53 (+0.20%) to 4,679.82
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Dow (^DJI): -50.71 (-0.14%) to 36,018.16
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Nasdaq (^IXIC): +112.41 (+0.75%) to 15,055.24
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Crude (CL=F): +$2.64 (+3.37%) to $80.87 a barrel
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Gold (GC=F): +$14.70 (+0.82%) to $1,813.50 per ounce
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10-year Treasury (^TNX): -1.2 bps to yield 1.7680%
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11:13 a.m. ET: U.S.-listed Chinese stocks rally following upbeat trade talks
Chinese stocks in the U.S. surged officials vowed to stabilize trade and called on financial institutions to further boost credit support to companies, according to Bloomberg.
The Nasdaq Golden Dragon China Index (^HXC) rose as much as 4.7% in morning trading after declining over 45% over the past year, per Bloomberg data.
Large-cap Chinese tech stocks saw the biggest moves: Alibaba (BABA) was up 3.74% to $133.10 per share, JD.com (JD) soared 8.83% to $75.75 per share, Pinduoduo (PDD) was up 6.91% to $60.93 per share, and DiDi (DIDI) gained 5.34% to trade at $4.73.
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11:00 a.m. ET: Stocks falter amid inflation talk at Powell testimony
Federal Reserve Chair Jerome Powell said the central bank would raise interest rates more over time if needed to tame soaring price levels as he responded to questions during his confirmation hearing before the Senate Banking Committee.
“We will use our tools to get inflation back," he told policymakers.
The Dow Jones Industrial Average dropped more than 250 points in early trading, while the S&P 500 and Nasdaq also ticked lower, losing steam after staging a comeback Monday afternoon.
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10:28 a.m. ET: Intel taps Micron exec for CFO role
Intel (INTC) analysts gave a nod of approval to the chipmaker on its move to recruit Micron’s (MU) David Zinsner to serve as chief financial officer as part of a broader shakeup by CEO Pat Gelsinger.
"Intel now has a 'dream team,' with 'one of the best CEOs and one of the best CFOs in the semiconductor industry,'" Citi analysts said. Zinsner "has driven higher operating margins at every public company he has been CFO at."
Still, challenges remain for Intel as it struggles with manufacturing delays and market-share losses.
Shares of Micron fell as much as 1.3% and were down 0.80% to $93.14 a piece as of 10:28 a.m. Intel edged 0.71% higher to $55.60 per share.
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9:30 a.m. ET: Markets struggle for direction after Monday's tech rebound
Here's how U.S. stocks fared at market open:
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S&P 500 (^GSPC): -0.07 (-0.00%) to 4,670.22
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Dow (^DJI): +21.91 (+0.06%) to 36,090.78
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Nasdaq (^IXIC): +6.93 (+0.05%) to 14,942.83
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Crude (CL=F): +$1.53 (+1.96%) to $79.76 a barrel
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Gold (GC=F): +$2.90 (+0.16%) to $1,801.70 per ounce
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10-year Treasury (^TNX): -0.2 bps to yield 1.7780%
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7:35 a.m. ET: Small business confidence sees modest uptick
U.S. small business sentiment saw a slight increase in December, even amid a backdrop of growing inflation worries and labor shortages.
The National Federation of Independent Business reported that its Small Business Optimism Index rose 0.5 point to 98.9 last month. Of small business owners who responded to the organizations survey, 22% said inflation was their primary operating concern — up from 18% in November.
Despite concerns over inflation, at 57% of respondents, 2% fewer business owners from the prior month reported plans to raise prices, and the proportion of mom- and pop- operators planing to do so fell five points to 49%.
On the employment front, 49% of owners said they had job openings that could not be filled, up one point from November.
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7:00 a.m. ET: Markets look to extend comeback as futures tick higher
Here were the main moves in markets ahead of Tuesday's open:
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S&P 500 futures (ES=F): +15.50 points (+0.33%), to 4,677.75
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Dow futures (YM=F): +78.00 points (+0.22%), to 36,030.00
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Nasdaq futures (NQ=F): +70.25 points (+0.45%) to 15,678.25
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Crude (CL=F): +$0.25 (+0.32%) to $78.48 a barrel
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Gold (GC=F): +$1.20 (+0.07%) to $1,800.00 per ounce
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10-year Treasury (^TNX): unchanged to yield 1.78%
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6:02 p.m. Monday ET: Stock futures remain unchanged after choppy session
Here’s where markets were trading ahead of the overnight session on Monday:
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S&P 500 futures (ES=F): +1.50 points (+0.03%), to 4,663.75
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Dow futures (YM=F): -6.00 points (-0.02%), to 35,946.00
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Nasdaq futures (NQ=F): +6.25 points (+0.04%) to 15,614.25
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Crude (CL=F): +$0.25 (+0.32%) to $78.48 a barrel
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Gold (GC=F): +$1.20 (+0.07%) to $1,800.00 per ounce
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10-year Treasury (^TNX): unchanged to yield 1.78%
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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