Stock Market Is Higher Today 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 wavered on Wednesday, as the Federal Reserve chairman began two days of Congressional testimony after another higher-than-expected inflation reading. 

By noon, the  Dow Jones Industrial Average dropped 42 points, or 0.1%, while the  S&P 500 fell 0.1% and the  Nasdaq Composite declined 0.2%.

Inflation continues to beat expectations. 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%. Companies have been passing along those price increases, as the consumer-price index beat estimates Tuesday. 

Recently, stocks have kept hitting new record highs as investors have pushed through concerns that inflation is long-lasting or that the Fed will raise interest rates too soon. “But the current data has got to be getting people a little bit concerned,” says Tony Bedikian, head of global markets at Citizens Bank.

Fed chair Jerome Powell is set to begin two days of testimony on Capitol Hill, where he will deliver his semiannual report on the state of monetary policy and the economy to Congress. The central banker is expected to stress the Fed’s relaxed policy stance.

The price of WTI crude oil fell 1.6% to $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, GlaxoSmithKline, and British American Tobacco were among the fallers in London.

Wells Fargo  & Co. (ticker: WFC) stock rose 1.7% 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 4.2% 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 1% 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 2.5% 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 4.4% after getting downgraded to Neutral from Outperform at Wedbush. 

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

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