Oleksandr Pylypenko
9 min read
In This Article:
September S&P 500 E-Mini futures (ESU25) are trending up +0.16% this morning, extending yesterday’s gains, while investors await further testimony from Federal Reserve Chair Jerome Powell for clues on the rate outlook.
The ceasefire brokered by U.S. President Donald Trump between Iran and Israel appeared to be holding on Wednesday, with both sides declaring victory in the war. Trump’s Middle East envoy said late on Tuesday that talks between the U.S. and Iran were “promising” and that Washington remained hopeful for a long-term peace agreement. Investors are now turning their attention back to the U.S. economy and how trade tensions and fiscal pressures could impact corporate earnings and growth.
In yesterday’s trading session, Wall Street’s three main equity benchmarks closed higher. Chip stocks rallied, with Intel (INTC) and Advanced Micro Devices (AMD) climbing over +6%. Also, DexCom (DXCM) surged more than +9% and was the top percentage gainer on the Nasdaq 100 after U.S. Health and Human Services Secretary Robert F. Kennedy Jr. announced that his agency is launching one of the largest campaigns in history to promote the use of wearable health devices. In addition, Uber Technologies (UBER) gained over +7% after the company announced that it would begin offering driverless Waymo rides to its customers in Atlanta. On the bearish side, Dollar General (DG) fell more than -1% after Goldman Sachs downgraded the stock to Neutral from Buy.
Economic data released on Tuesday showed that the U.S. Conference Board’s consumer confidence index unexpectedly fell to 93.0 in June, weaker than expectations of 99.4. Also, the U.S. April S&P/CS HPI Composite - 20 n.s.a. eased to +3.4% y/y from +4.1% y/y in March, weaker than expectations of +4.0% y/y. In addition, the U.S. Richmond Fed manufacturing index unexpectedly rose to -7 in June, stronger than expectations of -10.
Fed Chair Jerome Powell told lawmakers on Tuesday that the central bank is not in a hurry to cut interest rates as officials await greater clarity on the economic effects of President Trump’s tariffs. “The effects of tariffs will depend, among other things, on their ultimate level,” Powell said in remarks before the House Financial Services Committee. “For the time being, we are well-positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.” Should inflation come in below expectations or the labor market weaken, Powell said, the Fed could cut rates sooner.
Cleveland Fed President Beth Hammack said that interest rates are only modestly restrictive and that policymakers may keep borrowing costs steady “for quite some time.” Also, New York Fed President John Williams said that “maintaining this modestly restrictive stance of monetary policy is entirely appropriate to achieve our maximum employment and price stability goals,” while policymakers assess the full impact of U.S. policy changes. In addition, Boston Fed President Susan Collins said that monetary policy is in the right place, emphasizing that the “modestly restrictive” stance of monetary policy is “necessary.” Finally, Fed Governor Michael Barr stated that he expects tariffs to push inflation higher and voiced support for maintaining a wait-and-see approach on interest rates.
