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Stock Market Today: Dow Climbs, But Powell's Tough Inflation Talk Stokes Fears

Stock Markets Jun 29, 2022 04:17PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com -- The Dow closed higher Wednesday after Federal Reserve Chairman Jerome Powell reiterated the central bank’s commitment to keep tightening monetary policy to bring down inflation just as U.S. quarterly economic activity slipped for first time in two years.   

The S&P 500 fell 0.1%, the Dow Jones Industrial Average gained 0.3%, or 82 points, the Nasdaq was down 0.03%

"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 2% and 3%, respectively. 

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. Its shares were up about 1%.  

Energy stocks fell more than 3% 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 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 nearly 24% 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 fell more 1%.

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.

Stock Market Today: Dow Climbs, But Powell's Tough Inflation Talk Stokes Fears
 

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Comments (13)
Christopher Arntz
Christopher Arntz Jul 02, 2022 6:55PM ET
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Powell is bought off. I dont trust him anymore
Nils Hullmann
Nils Hullmann Jun 30, 2022 4:05AM ET
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this will end in civil war
Kerry Ditto
Kerry Ditto Jun 29, 2022 8:12PM ET
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maybe modern days now need 10% inflation as a new norm
William Bailey
William Bailey Jun 29, 2022 7:18PM ET
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Fed has done nearly nothing to stop inflation !!! Balance sheet still growing and 1.25 percent is useless
ZS Beck
ZS Beck Jun 29, 2022 6:36PM ET
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So let's see. They create recession and inflation comes down, maybe our cones down maybe not. Then they need stimulus and lower rates to save the economy, then what? Inflation comes back. A fantastic job is done by the endless stimulus and the FED. I see no happy ending here.
ZS Beck
ZS Beck Jun 29, 2022 6:36PM ET
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Maybe oil comes down..
William Bailey
William Bailey Jun 29, 2022 6:36PM ET
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Its a poo show
CS Greer
CSGreer Jun 29, 2022 5:37PM ET
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No.... the way to keep down inflation is to NOT PRINT TRILLIONS OF DOLLARS OUT THIN AIR AND LEND IT INTO EXISTENCE. This is economics 101.
CS Greer
CSGreer Jun 29, 2022 5:37PM ET
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Oh... and not shutting down the economy helps a smidge too.
Benoit Avril
Benoit Avril Jun 29, 2022 5:37PM ET
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Maybe try to go beyond 101, sometimes,it helps.
Nilay Dalal
Nilay Dalal Jun 29, 2022 5:37PM ET
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You sound as bright as captain obvious
Hunt Richardson
Hunt Richardson Jun 29, 2022 5:20PM ET
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they love to include the word "fear" in headlines don't they
Mike Jarvis
Mike Jarvis Jun 29, 2022 5:05PM ET
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If money was not pumped in during start of pandemic this wouldn't be happening as much as it is. They promoted capitalistic greed and here is the result.
CS Greer
CSGreer Jun 29, 2022 5:05PM ET
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It's not about Capitalism. Don't be a commie. Commie's are only good for filling up mass graves. See: former U.S.S.R., Vietnam, et al.
Nosha Meraj
Nosha Meraj Jun 29, 2022 4:59PM ET
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Inshallah business karne ki koshis
Mohd Haseen Ansari
Mohd Haseen Ansari Jun 29, 2022 4:48PM ET
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market will go down side approx 10-15%
Work Ethic
Work Ethic Jun 29, 2022 4:48PM ET
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based on what do you pontificate so willingly?
 
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