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Stocks rebound, yields fall as Fed's Powell soothes market

EconomyJul 14, 2021 04:31PM ET
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2/2 © Reuters. FILE PHOTO: A man works at the Tokyo Stock Exchange after market opens in Tokyo, Japan October 2, 2020. REUTERS/Kim Kyung-Hoon 2/2

By Herbert Lash and Carolyn Cohn

NEW YORK/LONDON (Reuters) -Global stocks prices closed flat and bond yields edged lower on Wednesday after U.S. Federal Reserve Chair Jerome Powell soothed investor angst by saying a recent inflation spike will fade, helping lift the S&P 500 to a fresh intraday record.

Powell said in congressional testimony that high inflation was for goods and services tied to the reopening and the U.S. economy was "still a ways off" from levels the Fed wanted to see before tapering its stimulus support.

Powell's remarks relieved investors who were concerned inflation data would prompt the Fed to signal the beginning of tapering, said Michael Arone, chief investment strategist at State Street (NYSE:STT) Global Advisors in Boston.

U.S. producer prices surged in June to the largest annual gain in more than 10-1/2 years, the Labor Department said. A day earlier, it said consumer prices rose by the most in 13 years.

"Both the CPI yesterday and the PPI today came in considerably above expectations and signaled that inflation continues to run hot," Arone said. "Even in the face of that Powell has stood steadfast."

The yield on the 10-year Treasury note slid 6.6 basis points to 1.3492%, the dollar eased and stocks on Wall Street rose, though gains were pared at the close of trading.

MSCI's all-country world equity index close slightly lower, down 0.03% at 726.09, after earlier matching Tuesday's record intra-day high of 728.77. The broad pan-European FTSEurofirst 300 index slid 0.1% to close at 1777.58, just below Tuesday's record high.

On Wall Street, the Dow Jones Industrial Average rose 0.13%, the S&P 500 added 0.12% and the Nasdaq Composite slipped 0.22%.

Overnight in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.25% as Chinese blue-chips fell 1.15%. Japan's Nikkei dipped 0.38%.

The Bank of Canada held its key overnight interest rate at a record low 0.25% as expected and said it would cut its weekly net purchases of government bonds to a target of C$2 billion ($1.6 billion) from C$3 billion.

The U.S. dollar edged lower against the Canadian dollar, down 0.01% at 1.2508 per U.S. dollar.

The New Zealand dollar shot up 0.92% as markets bet an interest rate hike is imminent after the central bank on Wednesday unexpectedly announced it would end its bond purchase program from next week.

The dollar index, which tracks the greenback versus a basket of six currencies, fell 0.4% to 92.364.

The euro was up 0.5% at $1.1836, while the yen traded down 0.6% at $109.9600.

President Joe Biden's administration is still pushing for U.S. fiscal stimulus. Late on Tuesday, Democrats on the Senate Budget Committee reached an agreement on a $3.5 trillion infrastructure investment plan they aim to include in a budget resolution to be debated this summer.

German 10-year Bund yields fell to -0.319% after Germany sold 3.392 billion euros in a top-up of its 0.00% 10-year Bund.

Oil prices dropped after Reuters reported Saudi Arabia and the United Arab Emirates had reached a compromise that should unlock a deal to boost global oil supplies as the world recovers from the coronavirus pandemic.

Brent crude fell $1.73 to settle at $74.76 a barrel. U.S. crude settled down $2.12 at $73.13 a barrel.

U.S. gold futures settled up 0.8% at $1,825 an ounce.

Stocks rebound, yields fall as Fed's Powell soothes market
 

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Comments (20)
Lany Braganca
Lany Braganca Jul 14, 2021 11:17PM ET
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One men army, makes the world dance to his say.
tim banks
tim banks Jul 14, 2021 2:41PM ET
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4.8% total inflation. 1.5% from used cars. base affects 0.9%. travel costs up 25% thats 0.4%. gives us 2.3%. so 2.5% inflation. not terribly high.
Jacob Steinschlag
Jacob Steinschlag Jul 14, 2021 2:41PM ET
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last time i read it was 6,6% YoY and its heading for 11% in 6 months.of course, if you exclude everything from the inflation report you wont see any inflation. what kind of logic is that?!
tim banks
tim banks Jul 14, 2021 2:41PM ET
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lol yea its inflation. im just saying why I'm not worried. youre comparing air and hotel travel from in the middle of a pandemic. then a chip shortage for cars, which should abate. we already reached peak prices for lumber, its down 50% from peak. same for cars, its a downward trend. why would i worry about those things. i used core inflation. gas prices are 2.90, prepandemic they were 2.70 so i dont worry about 25 cents. i paid 5 bucks a gallon in 08.
Critical Riff
Critical Riff Jul 14, 2021 2:41PM ET
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tim banks the chip shortage affects everything and anything that has chips
Jan Buyle
Jan Buyle Jul 14, 2021 1:40PM ET
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Real intrest rates (inflation - CPI) is strongly negative and will be for times to come. Time for gold, commodities, real estate, stocks of companies who own a lot of infrastructure...
Mitchel Pioneer
Mitchel Pioneer Jul 14, 2021 1:34PM ET
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Yep, can't pull the plug on the printing presses in this FED manufactured economy and stock market.
Kelly Mayer
Kelly Mayer Jul 14, 2021 1:19PM ET
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The market throughout the rest of the year: VVVVVVVVVVVVVVVVV. Get used to it.
Mox Mox
Mox Mox Jul 14, 2021 1:18PM ET
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the more he repeats his lie the closer he is to raise rates
Yama Fazel
Yama Fazel Jul 14, 2021 1:14PM ET
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Even if inflation goes during five years to upside for powell it is just transitory. It is so funny
TheLast LoserDon
TheLast LoserDon Jul 14, 2021 12:43PM ET
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Most of the posters on this site must be shorting the market and losing their A's. All the negative comments about the writers and the market in general. Get over it and jump in before it is too late!
S S Shet
pingo_0070 Jul 14, 2021 12:41PM ET
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this whole game is a sham .. this market is going up and up .. just based on one theory ... the fool theory ... there is always a bigger fool than the fool who is buying stocks at this valuation ... bcoz he knows that the bigger fool is definitely going to buy it from him ... currently market valuation is completely out of sync from the reality ..
jason xx
jason xx Jul 14, 2021 12:41PM ET
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Take your shorting L like a man!
Kelly Mayer
Kelly Mayer Jul 14, 2021 12:41PM ET
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Indexes are going up. The market is not going up as a whole. Far from it. We're well into correction territory for Energy, Gold, REITs, Travel. And going further down. Cyclical corrections. Major dips right now, great opportunities. Everything will jump after Jul the 26th or so. Then slump after September.
Yama Fazel
Yama Fazel Jul 14, 2021 12:33PM ET
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Powell is playing with fire
Loki Kan
Loki Kan Jul 14, 2021 12:20PM ET
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what rebound ?
Mitchel Pioneer
Mitchel Pioneer Jul 14, 2021 12:12PM ET
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The US Ponzi Scheme magically reverses as it goes red.  Criminally manipulated joke.
Ronald Warren
Ronald Warren Jul 14, 2021 12:12PM ET
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Looks like Powell's account at Black Rock will keep growing. Absolute control of your investments. Nothing to see here!
Chunki Kim
Chunky Jul 14, 2021 11:52AM ET
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is your monitor up side down? or are you color blind???
Chris Johnson
Chris Johnson Jul 14, 2021 11:52AM ET
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Haha... Exactly my thoughts... They are so eager to continue the mad storytelling they don't even bother looking at the prices
ishak ahmad
ishak ahmad Jul 14, 2021 11:25AM ET
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currently Nasdaq n his older brother heading south. Compass not working???
Elvis Durant
Elvis Durant Jul 14, 2021 1:35AM ET
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New norm of Fake news
divad mocihc
9divaD Jul 14, 2021 1:08AM ET
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All Ch!Com propapanda, make a good point, whole article cut down
YouTube Account
YouTube Account Jul 14, 2021 1:03AM ET
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why would they get jitters if it's only transitory? Oh, right, Powell was talking out his assets
divad mocihc
9divaD Jul 14, 2021 12:31AM ET
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I’ve got the inflation jitters again … i’m bloated and my hands are shaking
Yoyogi Shark
Yoyogi Shark Jul 14, 2021 12:31AM ET
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Why don't you shrug them off?
Mario tragik
Mario tragik Jul 14, 2021 12:22AM ET
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inflation jitters again ... omg these headlines and articles are hilarious.
Joe Lock
Joe Lock Jul 13, 2021 11:51PM ET
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Fake kneeeewwwssss
 
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