WATCH LIVE: Fed chair Powell to testify on inflation, state of economy

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PBS NewsHour 14 July, 2021 - 09:39am 9 views

When is Powell testimony?

Powell will testify to the House Financial Services Committee at noon on Wednesday and on Thursday, he will appear before the Senate Banking Committee at 9:30 a.m. Eastern. marketwatch.comPowell will stress patience in Capitol Hill testimony this week

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WASHINGTON (AP) — Federal Reserve Chair Jerome Powell said Wednesday that inflation, which has been surging as the recovery strengthens, “will likely remain elevated in coming months” before “moderating.”

At the same time, in testimony to the House Financial Services Committee, Powell signaled no imminent change in the Fed’s ultra-low-interest rate policies.

The Fed chairman reiterated his long-held view that high inflation readings over the past several months have been driven largely by temporary factors, notably supply shortages and rising consumer demand as pandemic-related business restrictions are lifted.

Still, House members peppered Powell with questions about rising inflation in recent months, with some expressing concern that prices will continue to accelerate. The Fed chair replied that the central bank would not respond to short-term price spikes by raising rates and risk weakening the economic recovery.

“By inflation, we mean year after year after year prices go up,” Powell said. “If something is a one-time price increase… you wouldn’t react to something that is likely to go away.”

“We really do believe,” he added, “that these things will come down of their own accord.”

Powell’s remarks coincided with rising concerns, among economists as well as ordinary households, that intensifying inflation pressures are creating a burden for many people and posing a potential threat to the recovery from the pandemic recession. On Wednesday, the government reported that wholesale prices, which businesses pay, jumped 7.3 percent in June from a year earlier. It was the fastest such 12-month increase on records dating to 2010.

And on Tuesday, the government said that prices paid by U.S. consumers surged in June by the most in 13 years. It was the third straight month that consumer inflation has jumped. Excluding volatile food and energy costs, so-called core inflation rose 4.5 percent in June, the fastest pace since November 1991.

Much of the consumer price gain was driven by categories that reflect the reopening of the economy and related supply shortages. Used car price increases accounted for about one-third of the jump. Prices for hotel rooms, airline tickets, and car rentals also rose substantially.

“It’s still the same story we’re seeing,” Powell said. “It’s a pretty narrow group of things that are producing these high (inflation) readings.”

But some increases could persist. Restaurant prices rose 0.7 percent in June, the largest monthly rise since 1981, and have increased 4.2 percent compared with a year ago. Those price increases likely are intended to offset higher wage and food costs as restaurants scramble to fill jobs.

The Fed has said it will keep its benchmark short-term rate pegged near zero until it believes maximum employment has been reached and annual inflation moderately exceeds 2 percent for some time. The central bank’s policymakers have said they’re prepared to accept inflation above its target to make up for years of inflation below 2 percent.

Powell said Wednesday that the economy is “still a ways off” from making the “substantial further progress” that the policymakers want to see before they will begin reducing their $120 billion in monthly bond purchases. Those purchases are intended to keep long-term borrowing rates low to encourage borrowing and spending.

He was asked to clarify what the Fed means by “substantial further progress.”

“It’s very difficult to be precise about it,” Powell replied. “We didn’t try to write down a particular set of numbers that would capture what we mean by that.”

At its most recent meeting in June, the Fed’s policymakers began discussing a reduction in those purchases, and Powell said Wednesday that those discussions “will continue … in coming meetings.”

Powell added that the Fed might adjust its policies if inflation, or the public’s expectations for inflation, “were moving materially and persistently beyond levels consistent with our goal.” Americans’ expectations for inflation are important because they can become self-fulfilling, as consumers may demand higher wages to offset rising prices.

The chairman was addressing the House committee Wednesday as part of his twice-a-year monetary policy report to Congress. On Thursday, he will testify to the Senate Banking Committee.

In his testimony, Powell was upbeat about the economy, with growth on track “to post its fastest rate of increase in decades.” He said hiring has been “robust” but noted there “is still a long way to go,” with the unemployment rate elevated at 5.9 percent.

At their most recent meeting last month, Fed officials forecast that they may raise their benchmark short-term rate twice by the end of 2023, an earlier time frame than they had previously signaled.

Powell, whose term as Fed chair will end in February, drew some bipartisan praise during questioning by House members. President Joe Biden could announce as soon as this fall whether he intends to reappoint him to another four-year term.

“You have earned and deserved another term as chair of the Federal Reserve,” Rep. Patrick McHenry, a Republican from North Carolina, told him. “You have proven to be a steady hand throughout this pandemic or ongoing recovery.”

Reps. Andy Barr, a Republican from Kentucky, and Brad Sherman, a California Democrat, echoed the notion that Powell should be reappointed. The Senate would have to confirm him for a second term. Though Powell enjoys broad support, some progressive groups oppose his reappointment because he has overseen the loosening of some regulations governing large banks.

On another topic, Powell said the Fed would publish research in early September on the potential for the central bank to issue a digital dollar. A digital currency would enable faster payments among banks, consumers and businesses and potentially allow Americans to hold dollars in electronic wallets on smart phones without needing an account at a conventional bank.

Powell said a digital dollar would be more efficient than having numerous cryptocurrencies and stablecoins issued by companies such as Facebook. A stablecoin is a digital currency that is backed by cash.

“I think that’s one of the stronger arguments in its favor — that … you wouldn’t need stablecoins, you wouldn’t need cryptocurrencies if you had a digital U.S. currency,” he said.

By Christopher Rugaber, Associated Press

By Courtney Vinopal

By Christopher Rugaber, Associated Press

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Stock market news live updates: Stocks end mixed as earnings roll in, Powell reaffirms stance on transitory inflation

Yahoo Finance 14 July, 2021 - 04:23pm

The S&P 500 gained and touched an intraday record, shaking off losses from Tuesday's session. The Dow also rose, while the Nasdaq erased earlier gains to end lower. Bank of America (BAC) shares dipped after the company became the latest major bank to post mixed second-quarter earnings results, with revenue net of interest expenses dipping 4% over last year and missing estimates amid a decline in interest rates. 

Stocks appeared to shrug off some of the concerns over inflation that had weighed on stocks earlier this week, especially after prepared remarks ahead of Federal Reserve Chair Jerome Powell's appearance before Congress on Wednesday showed he believed inflation "will likely remain elevated in coming months before moderating." The central bank leader also said the U.S. economy was "still a ways off" from reaching the Fed's threshold of "substantial further progress" toward recovering, which would trigger a roll-back of crisis-era asset purchases. 

Still, some of the latest data has pointed to a marked increase in prices, albeit off last year's pandemic-depressed lows. A hotter-than-expected print on consumer price inflation registered the fastest annual increase since 2008 on Tuesday. And on Wednesday, the Bureau of Labor Statistics' June producer price index registered a 7.3% year-over-year increase, marking the fastest rise on record in data spanning back to 2010.

Analysts have been split over just how transitory inflationary pressures in the market will ultimately end up being, and for how long the Federal Reserve will be able to shrug off rising prices before making a monetary policy move. Bank of America's Alexander Lin wrote in note to clients that the firm doesn't believe the consumer price index (CPI) "report changes much for the Fed," while ING economist James Knightley said the blowout inflation reading "makes it increasingly difficult for the Fed to stick to its position that elevated inflation readings are merely 'transitory.'"

Others are still firmly in the mindset that price pressures will subside later this year. And to be sure, much of the rise in the June CPI report comprised an increase in used car and truck prices and other categories consistent with an only momentary reopening-fueled surge.

"This inflation is transitory, and it will begin to pull back as we move towards the end of the year," Brent Schutte, Northwestern Mutual Wealth Management chief investment strategist, told Yahoo Finance. "There are parts of the economy that were impacted by COVID; those supply chains are still impacted. And that's what driving up the prices of certain aspects of the inflation equation." 

Here were the main moves in markets as of 4:03 p.m. ET:

S&P 500 (^GSPC): +5.17 (+0.12%) to 4,374.38

Dow (^DJI): +44.64 (+0.13%) to 34,933.43

Nasdaq (^IXIC): -32.70 (-0.22%) to 14,644.95

Crude (CL=F): -$2.56 (-3.40%) to $72.69 a barrel

Gold (GC=F): +$17.40 (+0.96%) to $1,827.30 per ounce

10-year Treasury (^TNX): -5.9 bps to yield 1.3560%

Both American Airlines and Delta Air Lines offered upbeat outlooks on travel in the back half of 2021, with increasing consumer demand to get out after over a year of social distancing helping boost airlines. However, without a full return of business travel and long-haul international air travel, getting these carriers' results back to 2019 levels will be difficult, one Cowen analyst noted. 

“We’re starting to see international [travel] come back … as markets reopen, there’s a jailbreak and people go to those markets, especially as restaurants and tourist attractions and other things reopen," Helane Becker, analyst at Cowen Research, told Yahoo Finance Live. "There's a shift of demand that's occurred from Europe to Asia into the United States. Instead of going to Europe this summer, you're probably going somewhere more local ... any place that's open where you don't have to quarantine." 

The three major indexes were only slightly above the flat line heading into the afternoon session on Wednesday, erasing most earlier gains.

The Dow erased earlier gains of as many as 180 points, or 0.5%, to trade just 13 points higher Wednesday afternoon. Nearly 2% gains in shares of Apple and Honeywell were mostly outweighed by drops in shares of Walgreens Boots Alliance, Caterpillar, and Salesforce, which were the biggest laggards in the index.

In the S&P 500, cyclical sectors including energy, financials and materials lagged, while consumer staples, real estate and utilities outperformed and kept the blue-chip index narrowly in the green. 

Here's where markets were trading after the opening bell on Wednesday: 

S&P 500 (^GSPC): +19.19 (+0.44%) to 4,388.40

Dow (^DJI): +155.41 (+0.45%) to 35,044.20

Nasdaq (^IXIC): +99.95 (+0.7%) to 14,779.61

Crude (CL=F): +$75.05 (-0.27%) to $75.05 a barrel

Gold (GC=F): +$17.90 (+0.99%) to $1,827.80 per ounce

10-year Treasury (^TNX): -3.9 bps to yield 1.376%

A slew of big bank earnings continued into Wednesday morning, with both Citi (C) and Wells Fargo (WFC) posting reports.

Citi shares gained after the company posted earnings that topped estimates, with earnings per share of $2.85 growing handily over the 50 cents per share in the comparable quarter last year and topping estimates for $1.94. The profit boost came alongside a reserve release as the company took down $2.4 billion in credit reserves amid the improving economy, versus last year's build of $5.9 billion. Beneath the headline results, however, Citi did show some weakness in fixed income trading, with revenue in the business unit down 43% over last year to $3.21 billion. The light quarterly bond-trading revenue matched trends seen at other big banks including JPMorgan Chase earlier this week. 

Meanwhile, Wells Fargo also beat earnings estimates, with earnings per share on $1.38 coming in well above the 98 cents anticipated. Revenue also beat, rising to $20.27 billion versus the $17.77 billion, led by consumer banking and lending. 

Producer prices rose far more than expected in June as supply chain constraints and shortages pushed up input prices for a range of goods.

The producer price index increased 1.0% in June over May, accelerating from May's 0.8% monthly rise, according to the Bureau of Labor Statistics. This outpaced estimates for a 0.6% monthly rise, according to Bloomberg data. About 60% of the increase in the overall index came amid a jump in prices in the services sector, with heightened demand in the service economy during the reopening pushing prices up.

Over last year, the producer price index rocketed higher by 7.3%, coming in well above May's 6.6% rise. This marked the fastest rise on record, based on BLS data going back to 2010.

Delta Air Lines (DAL) posted a smaller-than-anticipated second-quarter loss, with the marked return of leisure travel helping boost the company's results.

Adjusted losses were $1.07 per share, coming in narrower than the $1.42 expected, according to Bloomberg consensus data. Revenue of $6.3 billion matched expectations. 

Pre-tax losses of $881 million came down by about $2 billion compared to the first quarter of 2021. Delta Air Lines CEO Ed Bastian told Yahoo Finance's Adam Shapiro in an interview that he expected the airline would return to profitability in the current third quarter.

Mortgage application volume increased by the most since January last week as an at least momentary dip in interest rates attracted buying and refinancing activity in the housing market.

The Mortgage Bankers Association's weekly mortgage index rose 16% week-on-week during the period ended July 9. Refinances rose by 20% over last week, but were still 29% lower compared to the comparable week in 2020. Purchases were up 8% on the week, including a seasonal adjustment for the Fourth of July holiday. On an unadjusted basis, purchases were down 13% week-on-week and were down 29% over last year. 

“Overall applications climbed last week, driven heavily by increased refinancing as rates dipped again. Treasury yields have trended lower over the past month as investors remained concerned about the COVID-19 variant and slowing economic growth,” Joel Kan, MBA's associate vice president of economic and industry forecasting, said in a press statement. “Mortgage rates fell for the second consecutive week as a result, with the 30-year fixed rate hitting 3.09%, its lowest level since February 2021.

Here's where markets were trading Wednesday morning: 

S&P 500 futures (ES=F): 4,364.00, +2.75 points (+0.06%)

Dow futures (YM=F): 34,770.00, -6 points (-0.02%)

Nasdaq futures (NQ=F): 14,913.75, +0.33 points (+0.33%)

Crude (CL=F): -$0.65 (-0.65%) to $74.76 a barrel

Gold (GC=F): +$6.40 (+0.35%) to $1,816.30 per ounce

10-year Treasury (^TNX): -1.7 bps to yield 1.398%

Here's where markets were trading Tuesday evening

S&P 500 futures (ES=F): 4,359.75, -1.5 points (-0.03%)

Dow futures (YM=F): 34,778.00, +2 points (+0.01%)

Nasdaq futures (NQ=F): 14,864.75, -0.25 points (roughly unchanged)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

Fed Chairman Jerome Powell told Congress Wednesday that inflation readings came in higher than he had expected.

Britney Spears will once again face the court as her highly public battle to end her 13-year, court-ordered conservatorship rages on.

Micro-businesses have been mainly left out of the conversation regarding the U.S.’s economic recovery from the COVID-19 pandemic. However, the Milken Institute and web hosting company GoDaddy have joined forces on a new analysis highlighting the vital role of micro-businesses in the country’s economic growth and recovery.

BlackRock Inc Chief Executive Larry Fink said he does not see inflation as transitory and that the U.S. Federal Reserve will have to react to higher inflation numbers. "I am not calling for 1970's inflation but I just think we are going to have above 2% inflation .. probably closer to 3.5% to 4.0%," Fink said in an interview with Reuters.

U.S. producer prices accelerated in June, leading to the largest annual increase in more than 10-1/2 years, suggesting inflation could remain high as robust demand fueled by the economy's recovery from the COVID-19 pandemic strains the supply chain. Underlying producer prices rose at a moderate pace on a monthly basis in June. Federal Reserve Chair Jerome Powell told a congressional hearing on Wednesday that "inflation has increased notably and will likely remain elevated in coming months before moderating."

Digital wallet complaints soared as more people used these services and when stimulus checks went out.

Subway CEO says the decades old brand is "still in the game."

Top news and what to watch in the markets on Wednesday, July 14, 2021.

(Bloomberg) -- Megacap tech stocks led the S&P 500 marginally higher and bond yields fell as investors turned to defensive favorites with Federal Reserve Chairman Jerome Powell making the case for maintaining economic stimulus.The S&P 500 closed slightly higher with Powell emphasizing in Congressional testimony that the U.S. economic recovery still hasn’t progressed enough to begin scaling back asset purchases. Apple, Google parent Alphabet and Microsoft hit record highs. Bank of America dropped

A photo of a sign outside a Lincoln, Neb., Burger King has gone viral. The sign, which reads “we all quit” and “sorry for the inconvenience,” was put up by disgruntled staff members trying to send a message to upper management. “They wanted to put up a sign to say, you know sorry there’s really not going to be anyone here,” former general manager Rachael Flores told a local ABC affiliate.

The CPI inflation numbers seemed strong, but they didn't answer all the questions the consumers, investors, and the Fed have about what is going on in the economy.

With only 9% of plastic waste recycled in the U.S., Grove Collaborative is looking to product and packaging innovations to eliminate plastic waste.

The Dow Jones Industrial Average and the S&P 500 logged modest gains Wednesday, while the Nasdaq Composite rang up its second consecutive loss, after Federal Reserve Chairman Jerome Powell told a House Financial Services Committee that inflation will moderate and that he believes that policy makers can combat rising pricing pressures if they run even hotter. The Dow closed 0.1% higher at around 34,933, the S&P 500 index advanced 0.1% at about 4,374, pulling back after hitting an intraday high We

(Bloomberg) -- Oil’s rally fizzled as a build in U.S. fuel inventories and a potential OPEC+ agreement to increase supply cooled a buying spree that had pushed the market above $75.Futures in New York fell 2.8%, the most since May. Both gasoline and distillate inventories rose last week, according to a U.S. government report. Meanwhile, Saudi Arabia and the United Arab Emirates were said to resolve the standoff that has prevented OPEC+ from satisfying growing demand for extra barrels. Technical

U.S. stock indexes closed mostly higher Wednesday, after Federal Reserve Chairman Jerome Powell stresses that more progress is needed on economic recovery before the central bank's support will be scaled back.

Franklin Templeton CEO Jenny Johnson — whose firm manages more than $1.5 trillion in assets — criticized meme stock trading as risky investing that could produce lucrative highs or devastating lows.

Stocks retreated amid a hot inflation report and Fed chief Powell on tap. Apple kept rising as ARK ETFs slump.

(Compiled by the Global Finance & Markets Breaking News team)

Here's What’s More Expensive Because Of Inflation

Forbes 14 July, 2021 - 12:41pm

Inflation is abound. The June CPI inflation report shows that prices are still rising and it’s unclear when there will be any relief on our wallets.

After a hairy report in May, the most recent CPI report isn’t any better. Prices in June jumped 0.9% over May, according to the Bureau of Labor Statistics, marking the biggest monthly jump since June 2008. That might not seem like much, but compared to this time last year, prices have increased 5.4%.

Common household purchases—everything from food and clothing to dishes and gas—are more expensive than usual. And according to the Federal Reserve, they could keep climbing as the economy continues to rebound from the coronavirus pandemic.

Inflation is rising for a variety of reasons—and though the Federal Reserve has repeatedly warned of its scope, the actual numbers continue to beat expectations. That means multiple items that are part of everyday American life are putting increased strain on consumers’ finances.

These items have seen some of the highest gains in price from May to June:

The increase in prices is being seen nationally, with little difference between regions. The CPI report reveals that both the Northeast and Midwest both saw a 1.0% increase in prices from May to June, and the south and west both saw a 0.9% increase.

If those percentages don’t sound like much to you, looking at it from a broader perspective reveals the impact inflation and the economic recovery is having on a variety of products. These prices have been climbing for the past year. According to CNN, home prices are up 20% over the last year; gas prices are up 40%, and car rentals are up 86%.

As the economy continues to rebound, demand is increasing. That’s tough for supplies and goods that have been affected by supply-chain shortgages, like computer chips for cars. Now, as more people are on the roads, flying or out and about shopping, prices are being pushed upwards.

There’s also no indication that prices will dip anytime soon, according to Federal Reserve Chairman Jerome Powell.

“Inflation has increased notably and will likely remain elevated in coming months before moderating,” Powell said Wednesday during  testimony before the House Financial Services Committee. The Central Bank believes long-term inflation expectations remain under control, which ultimately means the economy is generally recovering as expected, Powell said.

I'm a Personal Finance Reporter for Forbes Advisor. Previously, I covered personal finance at other national web publications including Bankrate and The Penny Hoarder. I've been featured as a personal finance expert in outlets like CNBC, Yahoo! Finance, CBS News Radio and more. When I'm not digging up the best ways to manage your money, I'm out traveling the world. Follow me on Twitter at @keywordkelly.

Citigroup Rises, Bank of America Falls, and the Stock Market Is Looking Up

Barron's 14 July, 2021 - 08:06am

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Stocks were set for a slightly higher open, with tech shares rising the most, as investors tune in to a testimony from Federal Reserve Chairman Jerome Powell.  

Futures on the Dow Jones Industrial Average gained 82 points, or 0.2%, while S&P 500 futures rose 0.4% and Nasdaq Composite futures advanced 0.7%.

Markets are awaiting words from Powell, who will speak to the House Committee on Financial Services at noon about monetary policy. Investors want to hear evidence that the Fed won’t move too quickly to raise interest rates in the face of higher-than-expected inflation, a move the central bank is expected to make in late 2022 or 2023. For the moment, investors are concerned that economic growth has peaked, which makes economically-sensitive stocks less attractive and shares of fast-growing technology companies more attractive. 

“Stock futures are little changed … ahead of testimony from Fed Chair Powell,” writes Tom Essaye, founder of Sevens Report Research. 

Meanwhile, data from the Bureau of Labor Statistics this morning showed that the producer-price index rose 7.3% on a yearly basis in June, beating estimates of 6.8%. 

Here are five stocks making moves in Wednesday’s premarket action:

Wells Fargo & Co. (ticker: WFC) stock rose 0.3% after reporting a profit of $1.38 a share, beating estimates for 98 cents a share, on revenue of $20.3 billion, above expectations for $17.8 billion. 

Bank of America (BAC) stock dropped 1.4% after reporting a profit of 80 cents a share, beating estimates of 77 cents a share, on revenue of $21.6 billion, below expectations for $21.8 billion. 

Citigroup (C) stock gained 1.5% after reporting a profit of $2.85 a share, beating estimates of $1.96 a share, on revenue of $17.5 billion, above expectations for $17.2 billion. 

Delta Air Lines (DAL) stock gained 1.75% after reporting a loss of $1.07 a share, narrower than estimates of a loss of $1.38 a share, on sales of $7.1 billion, above expectations for $6.2 billion. 

Peloton Interactive (PTON) stock dropped 2.4% after getting downgraded to Neutral from Outperform at Wedbush. 

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

Stocks were set for a slightly higher open, with tech shares rising the most, as investors tune in to a testimony from Federal Reserve Chairman Jerome Powell.

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