Stock Market Ends the Day Mixed as Powell Heads to Capitol Hill – Barron’s

Jerome Powell is set to deliver his semiannual report on the state of the economy to Congress.

(Photo by Graeme Jennings/Getty Images)

Stocks were mixed on Wednesday as investors largely shook off higher-than-expected inflation. The chairman of the Federal Reserve also began two days of Congressional testimony.

The  Dow Jones Industrial Average gained 44 points, or 0.13%, while the  S&P 500 rose 0.12% and the  Nasdaq Composite declined 0.22%. This was a better performance than Tuesday, which saw all three indices decline.

Not only were two of the major indexes up after falling Tuesday, but the number of rising stocks also improved; about half of S&P 500 stocks were in the green — and that number was as high as 70% earlier in the day, according to FactSet. That compares with 15% Tuesday, according to FactSet data. The dip buying has been a trend in the past year. Days when 15% or few of S&P 500 stocks were gainers, the following day’s average was an improved 68%, according to data from Instinet.

“Any pullback, or even pauses, people are going to buy into,” says Dan Genter, CEO and chief investment officer for RNC Genter Capital Management. “When you look at it from a macro perspective, people want to be in this market.”

This comes even as inflation keeps beating expectations. Government data released Thursday showed that the producer-price index rose 7.3% on a yearly basis in June, beating estimates of 6.8%. Companies have been passing along those price increases; consumer-price index also beat estimates Tuesday. 

But investors don’t see the inflation prompting the Federal Reserve to raise interest rates too quickly. “The markets are still focused on what the Fed is saying,” says Tony Bedikian, head of global markets at Citizens Bank. “The Fed believes that inflation is fleeting and going to be declining by year-end.”

Fed chair Jerome Powell began two days of testimony on Capitol Hill, where he delivered his semiannual report on the state of monetary policy and the economy to Congress. Powell didn’t offer new information or insight on the direction of monetary policy and the market’s narrative that the Fed isn’t close to raising rates soon remains strong.

The price of WTI crude oil fell 3.3% to $72.74 a barrel as OPEC has indicated it intends to boost oil production.

In Asia, Tokyo’s Nikkei 225 slipped 0.4%, while Hong Kong’s Hang Seng declined 0.6%. The Shanghai Composite fell 1.1%. The FTSE 100 in London was 0.5% lower as the pan-European Stoxx 600 slipped 0.1%. The CAC 40 in Paris and Frankfurt’s DAX were flat.

The travel sector was taking a beating, led down by shares in TUI, the world’s largest tourism group and an operator of hotels, airlines, and cruises. TUI stock dropped while airlines Air France-KLM, Lufthansa, Ryanair, and IAG —the owner of British Airways—nosedived along with shares in hotels giant InterContinental Hotels Group.

Shares in major British multinationals, which do business in dollars and are sensitive to currency shifts, were broadly lower. U.K. inflation data, showing a rise in consumer prices and relative decline in producer prices, saw sterling strengthen against the dollar. Unilever, Vodafone and GlaxoSmithKline were among the fallers in London.

Wells Fargo  & Co. (ticker: WFC) stock rose 4.05% 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 2.46% 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 fell 0.25% 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 slipped 1.6% 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. 

Shares in Hugo Boss rose more than 2% in German trade after the luxury fashion group reported earnings before interest and taxes of €42 million ($49.5 million), crushing expectations of around €17 million.

Barratt stock rose 2% in London trade as one of the U.K.’s largest housing developers said in a trading update that it expects full-year profit before tax to be above the top end of the range of market expectations.

Peloton Interactive  (PTON) stock dropped 5.42% after getting downgraded to Neutral from Outperform at Wedbush. 

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

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