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S&P 500 Flat as Powell Reiterates Inflation Fight Despite Slip in U.S. Growth

Stock Markets Jun 29, 2022 03:12PM ET
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© Reuters

By Yasin Ebrahim

Investing.com -- The S&P 500 struggled for direction Wednesday after Federal Reserve Chairman Jerome Powell reiterated the central bank’s commitment to keep tightening monetary policy to bring down inflation just as data showed a faster than expected decline in quarterly economic growth. 

The S&P 500 fell 0.2%, the Dow Jones Industrial Average gained 0.3%, or 78 points, the Nasdaq was down 0.10%

"The way to do that [curb inflation] is to slow down [economic] growth, but ideally keep it positive,” Powell said on Wednesday, though conceded that there “is a risk” that the fed may go too far and cause a recession. The Fed chief, however, stressed that the biggest threat to the economy isn’t the Fed overshooting monetary policy tightening, but rather “failing to restore price stability.”

The Fed’s policy measures appear to be already having the desired impact, with the latest economic data showing the first contraction in quarterly U.S. GDP since Q2 2020.

The final reading of first-quarter GDP unexpectedly was revised down by 0.1% to a 1.6% contraction on an annualized basis in the final Q1 report.

Treasury yields gave up some gains, pushing growth sectors like tech higher. Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) led the gains for big tech, up more than 1%.  

But a fall in semiconductor stocks kept gains in the broader tech sector in check after Bank of America warned of a weaker backdrop for chip demand. 

"Tighter global monetary policy, geopolitical turmoil and consumer weakness is likely to pressure 2HCY22/CY23E chip demand," Bank of America said in a note, according to Barrons.

NVIDIA (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) were down more than 3%.

Snap (NYSE:SNAP), meanwhile, detailed plans to launch a $3.99 per month subscription plan, Snapchat+, for social media platform Snapchat. The subscription service set to launch this week isn’t expected to become a “material source of revenue” the company said. The shares were flat after giving up early-day gains.  

Energy stocks fell more than 2% after oil prices were pressured by ongoing worries that softer global growth will hurt energy demand.

Consumer discretionary stocks flirted with gains and losses under pressure from a slump in cruise operator Carnival.

Carnival (NYSE:CCL) sank more than 14% after Morgan Stanley cut its price target on the stock to $7 per share from $13 on worries the company’s debt levels pose a serious risk should another shock to demand emerge.

Other cruise operators including Norwegian Cruise Line (NYSE:NCLH) and Royal Caribbean Cruises (NYSE:RCL) fell more than 9%.

On the earnings front, meanwhile, investors digested mostly better-than-expected quarterly results; however, inflation is expected to continue to weigh on growth.

General Mills (NYSE:GIS) reported quarterly results that beat on both the top and bottom lines, but the food producer forecast weaker-than-expected growth for the full-year on concerns about inflation and a consumer shift in demand to lower priced goods. Its shares rose 6%.

Bed Bath & Beyond (NASDAQ:BBBY) fell 23% after reporting a wider than expected loss in the first quarter, and announcing that Mark Tritton will step down as chief executive officer.

McCormick (NYSE:MKC) delivered lower-than-expected quarterly results and cut its full-year outlook, citing higher costs and supply chain issues. Its shares gained more 2%.

In other news, Nio (NYSE:NIO) denied allegations from Grizzly Research that the Chinese electric carmaker was inflating its revenue from battery sales to Wuhan Weineng Battery Asset in which it has a nearly 20% stake.

S&P 500 Flat as Powell Reiterates Inflation Fight Despite Slip in U.S. Growth
 

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Comments (7)
Antonio Velardo
Antonio Velardo Jun 29, 2022 4:26PM ET
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November 8, we need a change.
First Last
First Last Jun 29, 2022 4:26PM ET
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Need to elect better people.  The question is: Is the electorate better?
Mitchel Pioneer
Mitchel Pioneer Jun 29, 2022 3:57PM ET
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Another round of "late trade" magic.  Those savvy "investors" just love "buying" into the close.  The legalized financial defiling of America continues.
First Last
First Last Jun 29, 2022 3:57PM ET
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Quit whining.  The market is flat for the day.
Al Smith
Al Smith Jun 29, 2022 3:50PM ET
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all Powell is doing is ***the housing market and trying to make America poorer.  Inflation is GOING NOWHERE until the price of oil goes lower.  everything will continue to cost more until the cost of producing it is lowered.  His methodology for battling inflation using all his "tools" which are limited is only beneficial to those that are now short the market... which is most likely the same folks that were riding his money printing gravy train.  yes... in the long run... oil prices will come down... after he sticks a wedge in the heart of the economy and kills it.
First Last
First Last Jun 29, 2022 3:50PM ET
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Powell & the Fed Reserve control the US monetary policy, not the Russian war machine.
Al Smith
Al Smith Jun 29, 2022 3:50PM ET
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First Last  oil was going up long before Russia decided to intervene with the shadow government the Obama administration put in place.  the truth of the matter would probably make Americans look like total trash.... just my opinion of course... but i don't trust anyone that insists on allowing the mass media to be used to disseminate propaganda.
First Last
First Last Jun 29, 2022 3:50PM ET
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Al Smith   Russia started massing troops along Ukraine's border in mid-2021 and invaded in Feb 2022.  The stock markets peaked in late 2021.  Crude spiked from the $70-80 range to the current $100-130 range after the invasion started.
Al Smith
Al Smith Jun 29, 2022 3:50PM ET
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First Last  yeah... and the US is producing how much less than mid-2021?  and OPEC is producing how much less than 2021?  no less.  Russia still produces as well... and they still sell it on the market.  If anything, the war probably resulted in a net reduction of oil consumption in the Ukraine area.  The prices are higher because the market makers have decided they wanted it higher... especially considering they were buying for 20$/brl a couple years ago.
First Last
First Last Jun 29, 2022 3:50PM ET
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Al Smith   Production is not any less; demand is more with global economies re-opening from the pandemic and vaccines.  World & US production of crude & nat gas are higher now than in 2021:  www.eia.gov/outlooks/steo/report/global_oil.php  &  www.eia.gov/petroleum/production/
Dave Jones
Dave Jones Jun 29, 2022 3:26PM ET
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Economic collapse and free money. The bedrock of wall street.
Stan Smith
Stan Smith Jun 29, 2022 3:23PM ET
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STAGFLATION
Mitchel Pioneer
Mitchel Pioneer Jun 29, 2022 3:08PM ET
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Hooks and chains flagrantly holding the DOW above 31K and the S&P above 3800.  Truly, the laughingstock of the financial world.
David SheepofCCP
David SheepofCCP Jun 29, 2022 3:08PM ET
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You truly are living pre-1990. Did you miss the paradigm shift over the past 30 years? You're totally clueless and whine like a disillusioned boomer.
Dave Jones
Dave Jones Jun 29, 2022 3:08PM ET
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Paradigm shift? You mean the middle and working class being ruthlessly destroyed?
First Last
First Last Jun 29, 2022 3:08PM ET
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Dave Jones   The stock market isn't a game for "middle and working class".
David SheepofCCP
David SheepofCCP Jun 29, 2022 3:08PM ET
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Depends on your definition of middle class. Not everyone loses. Market doesnt differentiate between rich and poor. It's comprised of buyers and sellers. Yes, some have more purchasing power than others but you still need both. If one can't understand that then maybe they should just sit on the sideline.
David SheepofCCP
David SheepofCCP Jun 29, 2022 3:08PM ET
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Old Mitchel wants the market to return to the days of P/E being around 12 and when NASDAQ was trading in penny stocks. That ship has long sailed. LOL
Suresh Kumar
Suresh Kumar Jun 29, 2022 2:57PM ET
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To control inflation, Mr. Powell wants to slow down the growth. But inflation measures were taken very recently. GDP is already negative, how much further does he want to slow down?
 
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