June 22 (Reuters) – The S&P 500 and Nasdaq ended higher as Federal Reserve Chairman Jerome Powell continued to beat the hawk’s drum, suggesting central banks may not see the end of the tightening cycle. But the Fed will proceed cautiously.
Momentum stocks led by Amazon.com (AMZN.O) Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O) delivered strong gains on the tech-heavy Nasdaq, while the S&P 500 gained modestly.
Industrials (.SPLRCI) and Financials (.SPSY) kept the Dow blue chips essentially flat.
“Investors are in a tug-of-war, like plucking daisy petals, saying, ‘It’s not a bull market, it’s a bull market,'” said Sam Stovall, chief investment strategist at CFRA Research in New York. “We don’t have much to trade. Q2 results are not yet to start in a few weeks.”
Appearing before the Senate Banking Committee to testify on semi-annual monetary policy, Powell reiterated his view that more rate hikes are likely in the coming months.
“The market believes the Fed will raise rates one more time, not twice as implied in the FOMC meeting summary,” Stovall added. “Moreover, yesterday and today, Powell reiterated that they will rely on data and that Wall Street expects inflation to cool down faster and unemployment will start to rise higher.
Investors were stunned when the Bank of England implemented a larger-than-expected 50bps rate hike to tackle stubborn inflation in the UK.
According to CME’s FedWatch tool, financial markets put the odds of another 25bps rate hike at 77% at the end of the July Fed meeting.
On the economic side, jobless claims reached a 20-month high and the Conference Board’s leading economic index fell for 14 straight months, suggesting that the Fed’s recession efforts are beginning to have the intended effect.
The Dow Jones Industrial Average (.DJI) fell 4.81 points (0.01%) to 33,946.71, the S&P 500 (.SPX) index rose 16.2 points (0.37%) to 4,381.89, and the NASDAQ Composite Index (.IXIC) added 128.41 points. I did. 0.95% to 13,630.61.
Five of the 11 major sectors in the S&P 500 ended higher, with Consumer Discretionary (.SPLRCD) posting the biggest gains.
Real Estate (.SPLRCR) and Energy (.SPNY) recorded the biggest declines.
Spirit AeroSystems (SPR.N) plunged 9.4% after the aircraft parts supplier announced it would halt production at its Wichita, Kansas plant after workers announced a strike on June 24.
Boeing (BA.N) stock fell 3.1%.
Shares of US-listed Accenture fell 1.9% after the IT consulting firm predicted weaker-than-expected fourth-quarter revenue.
Olive Garden’s parent company, Darden Restaurants (DRI.N), announced a disappointing full-year earnings outlook due to soaring commodity prices. Shares fell 2.6%.
There were more stocks falling on the NYSE than rising stocks by a ratio of 2.17 to 1. On the NASDAQ, a 1.62:1 ratio favored the downtrend.
The S&P 500 made 16 new 52-week highs and 5 new lows. The Nasdaq Composite recorded 55 new highs and 118 new lows.
Volume on US exchanges was 9.6 billion shares compared to an average of 11.37 billion shares for all sessions over the last 20 trading days.
report by Stephen Culp; Additional reports by Shubham Batra, Shristi Achar A and Medha Singh of Bengaluru; Edited by Aurora Ellis
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