Nasdaq, S&P 500 gain as Powell wraps up testimony

By Stephen Culp

(Reuters) – Wall Street was mixed on Thursday as U.S. Federal Reserve Chairman Jerome Powell, in his second day of congressional testimony continued to beat a hawkish drum and suggested the central bank has not reached the end of its tightening cycle.

The Nasdaq was in solid green territory with a boost from tech- and tech-adjacent momentum stocks led by Amazon.com (NASDAQ:) and Apple Inc (NASDAQ:), while the ‘s advance was more tentative.

Industrials and financials pulled the blue-chip Dow slightly lower.

“We’re having a little bit of a respite from what the market did last week, and it’s reflecting Powell’s comments about the likelihood that we need further rate hikes and the market’s trying to digest that,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

Powell, appearing before the Senate Banking Committee for his semi-annual monetary policy testimony reiterated his view that more interest rate hikes are likely in the months ahead, a sentiment echoed by Fed Governor Michelle Bowman earlier in the session.

“The market is trying to figure out whether we’re past the hump with respect to the rapid acceleration,” Carlson added. “There’s a lot of moving parts here as to why the Fed didn’t do something this time but say they’re going to do something later.”

Markets were taken by surprise when the Bank of England implemented a larger-than-expected 50 basis point rate hike to tackle Britain’s stubborn inflation, further evidence that hot price growth remains a global economic headwind.

At last glance, financial markets have priced in a 77% probability of another 25 basis point rate hike at the conclusion of the Fed’s July meeting, according to CME’s FedWatch tool.

On the economic front, jobless claims held steady at a 20-month high and the Conference Board’s Leading Economic index posted its 14th consecutive monthly decline, suggesting that the Fed’s efforts to dampen the economy are beginning to have their intended effect.

At 2:04PM ET, the fell 19.11 points, or 0.06%, to 33,932.41, the S&P 500 gained 8.4 points, or 0.19%, to 4,374.09 and the added 93.11 points, or 0.69%, to 13,595.31.

Of the 11 major sectors of the S&P 500, consumer discretionary was enjoying the largest percentage advance, while real estate was down the most.

Spirit AeroSystems (NYSE:) tumbled 8.7% after the aircraft parts supplier announced it would suspend production at its plant in Wichita, Kansas, after workers announced a strike from June 24.

Boeing (NYSE:) shares dropped 2.3%.

U.S.-listed shares of Accenture (NYSE:) fell 3.0% after the IT consulting firm forecast weaker-than-expected fourth-quarter revenue.

Darden Restaurants (NYSE:) slid 3.1% after the Olive Garden parent issued a disappointing annual profit outlook as the Olive Garden parent contends with ballooning commodities prices.

Declining issues outnumbered advancing ones on the NYSE by a 2.31-to-1 ratio; on Nasdaq, a 1.59-to-1 ratio favored decliners.

The S&P 500 posted 14 new 52-week highs and 5 new lows; the Nasdaq Composite recorded 46 new highs and 96 new lows.