Wall Street opens slightly higher before a new hearing from the Fed boss

Reuters Interview 6/24/22
June 24, 2022
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Wall Street opens slightly higher before a new hearing from the Fed boss

The New York Stock Exchange moved up modestly on Thursday after the opening, pending a new hearing in Congress by the president of the American central bank (Fed), Jerome Powell, who had already heard the day before, before a Senate committee.

Around 4:00 p.m. GMT, the Dow Jones index advanced by 0.68% as did the Nasdaq, while the broader S&P 500 index gained 0.66%.

After Jerome Powell’s intervention in the Senate on Wednesday, the Dow Jones closed down 0.15%, at 30,483.13 points, the Nasdaq also lost 0.15%, at 11,053.017 points, and the S&P 500 fell 0.13% to 3,759.89 points.

The boss of the Fed was preparing to testify before a committee of the American House of Representatives on Thursday, after his hearing in the Senate the day before.

He was to reiterate the central bank’s determination to curb inflation at the risk of causing a slowdown in the economy.

“He was very outspoken yesterday (Wednesday) that they would do anything to fight inflation and the consequences of that could be maybe a recession,” noted Peter Cardillo of Spartan Capital Securities.

“The market has accommodated because investors have already taken into account these risks,” said the analyst.

On Wednesday, Jerome Powell assured that the US economy was “very solid” and able to withstand the tightening of financial conditions caused by the rate hike that will continue.

But when asked by lawmakers about the risks of a recession if rates rose too high and too fast, he said it was “certainly a possibility” and that a soft landing for the economy would be “difficult”.

In the first quarter, US GDP contracted by 1.5%.

The first estimate of growth for the second quarter is not expected until the end of September. A recession is technically defined as two consecutive quarters of declining gross domestic product.

The market, however, remained “agitated” Thursday, “in a context of persistent fears of global recession”, nuanced analysts at Schwab.

Yields on 10-year Treasury bills, which move in the opposite direction to the price of these bonds, fell sharply to 3.07% against 3.15% the day before.

On the stock market, Tesla lost 2.24% to 692 dollars, while its boss Elon Musk reported, in a recent interview published Wednesday evening, that its factories in Berlin, Germany, and Texas were losing a lot of money because of problems in the supply chain, calling them “a gigantic cash machine”.

Oil company Occidental Petroleum Corporation saw its stock climb 2.12% to almost $57, while Warren Buffet’s fund Berkshire Hathaway further increased its stake by buying some 9.5 million more shares this week, according to documents provided to the stock exchange authority SEC.