Stocks remained near all-time highs on Wall Street as investors digested Federal Reserve Chair Jerome Powell’s remarks on the economy. Powell’s comments were seen as balanced, reinforcing the view that the Fed will likely cut rates later this year.
The S&P 500 rose to around 5,580, marking its sixth consecutive session of gains, the longest winning streak since January. Tech stocks, particularly chipmakers like Nvidia Corp. and Intel Corp., led the way higher. Treasury yields also advanced, with the 10-year yield reaching 4.3%.
Investors on Wall Street reacted to Powell’s remarks with cautious optimism. While Powell maintained a balanced view on the economy, there was a hint of dovishness that suggested a rate cut could be on the horizon. Many analysts are now predicting a rate cut in September, with some even suggesting a second cut in December.
Traders are closely monitoring the labor market for signs of a potential recession. The Sahm rule, a heuristic indicator that has accurately predicted recessions since 1970, is being watched closely. While the rule currently suggests a soft-landing scenario, any cracks in the labor market could change that outlook.
In the corporate world, Pershing Square has started a roadshow for a potential IPO of a US closed-end vehicle, while Pfizer Inc. is set to replace its top scientist after a long tenure. Additionally, BP Plc warned of lower refining margins and a potential writedown on a plant in Germany.
Looking ahead, key events this week include China’s PPI and CPI data, Jerome Powell’s testimony to Congress, and earnings reports from major banks like Citigroup, JPMorgan, and Wells Fargo.
Overall, Wall Street remains cautiously optimistic about the economic outlook, with a focus on potential rate cuts and the performance of key sectors like tech. Investors are bracing for potential volatility as they navigate the uncertain economic landscape.
