By Yasin Ebrahim
Investing.com – The Nasdaq closed at a record highs Tuesday with big tech making strong gains as Federal Reserve Chairman Jerome Powell in testimony before Congress continued to downplay fears over the sharp pace of inflation.
The S&P 500 rose 0.51%, the Dow Jones Industrial Average gained 0.20%, or 68 points, and the Nasdaq Composite was up 0.79% at 14,223.27.
Powell largely stuck to his prepared remarks in testimony before a House select subcommittee hearing on the Fed’s pandemic response and the economy, reiterating the rapid pace of inflation will fade and job gains will pick up in the coming months.
“[P]erhaps all of the overshoot in inflation comes from categories such as rising used car and trucks, airplane tickets, hotel prices that have been affected by the reopening of the economy," Powell said in response to questioning from lawmakers on whether inflation is transitory. These factors "will ultimately start to decline."
“[W]hile these effects have turned out to be larger than we expected, the incoming data are consistent with the view that these factors will wane over time,” he added.
Ahead of the speech, differing remarks from several Fed members – who lean dovish or hawkish – on how soon to rein in easy monetary policy measures have raised concerns over a possible growing divide among Fed members.
St. Louis Fed President James Bullard and Dallas Fed president Robert Kaplan signaled that tapering could come sooner rather than later. Meanwhile New York Fed President John Williams called for support to remain in place as the economy is still a ways off from achieving the Fed's goals.
Technology stocks benefited from the weakness in bond yields, with the United States 10-Year remaining below 1.5%.
Microsoft (NASDAQ:MSFT, Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB), Amazon.com (NASDAQ:AMZN) and Google-parent Alphabet (NASDAQ:GOOGL) were higher.
Alphabet pared intraday losses that followed reports that the EU launched a formal antitrust investigation into the company's core digital ad business.
As well as falling yields, the broader tech sector was helped by a boost from semiconductor stocks, led by Nvidia.
Nvidia (NASDAQ:NVDA) ended up more than 2% higher after the chipmaker made further efforts to deter cryptocurrency miners from purchasing its chips to avoid the boom and bust demand cycle seen a few years ago when a sharp turn lower in cryptocurrency mining activity resulted in a chip supply overhang.
Some on Wall Street sees further gains for tech ahead, with quarterly results on the horizon.
"Overall we remain very bullish on tech stocks for 2H as robust June results and guidance around the corner will be another positive catalyst for the tech sector in our opinion," Wedbush said.
In cryptocurrency news, Bitcoin briefly fell below the $30,000 for the first since January, but bounced back as the popular crypto continues to search for meaningful support following its slump from $60,000 earlier this year.