Wall Street is mixed on and holding a bit steadier after sliding for three straight weeks through what’s been a dismal August.
Putting more pressure on the stock market were rising yields in the bond market, where the 10-year Treasury yield touched its highest level since 2007 and rose above 4.34 per cent and is hovering around that level. That’s up from 4.25 per cent late Friday and from less than 0.60 per cent in 2020.
The worry is that Powell will dash investors’ hopes that the Fed has already hiked interest rates for the final time and that its next move will be to cut rates early next year.The Fed has already pulled its main interest rate to its highest level since 2001 in an effort to grind down high inflation. High rates do that by slowing the entire economy bluntly and hurting prices for investments.
The week after Powell’s speech, reports are due on each of those topics. One is the latest update on the Fed’s preferred measure of inflation, and the other is the monthly jobs report. “The Fed will likely wait to be informed by these new data before changing their current posture,” Goldman Sachs’ Lexi Kanter and Michael Cahill wrote in a report.
The economy has remained remarkably resilient despite much higher interest rates. While the solid job market and spending by U.S. households eases long-held worries about a possible recession, they could also add upward pressure on inflation.Another big event for the market will be Nvidia’s profit report scheduled for Wednesday. The chip maker’s stock has flown higher this year, more than tripling on excitement about demand for artificial-intelligence technology.
The S&P 500 has dropped 4.4 per cent in August to give back more than a quarter of its big gains from the first seven months of the year. Technology and other high-growth stocks seen as some of the biggest losers of higher rates have been hit particularly hard.Tesla, one of those high-growth stocks, rose 6 per cent to recover some of its 11 per cent loss from last week.
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