Title: Stocks Surge as Wall Street Analyzes Fed Chair Powell’s Comments on Economy and Rates
Date: May 17, 2023
By: [Author’s Name]
New York City – Stocks experienced gains on Thursday as investors closely examined statements from Federal Reserve Chair Jerome Powell while keeping a close eye on a significant milestone regarding bond yields.
The S&P 500 and Nasdaq Composite each saw a 0.3% increase, while the Dow Jones Industrial Average rose by 140 points, or 0.4%.
Powell’s remarks regarding the economy and interest rates failed to provide traders with a higher level of certainty regarding the Federal Reserve’s next steps. He acknowledged that inflation remains too high and would likely necessitate lower economic growth. However, Powell also emphasized that recent data showcased progress in curbing rising prices. He further asserted that current monetary policy remains appropriate.
“Incoming data over recent months show ongoing progress toward both of our dual mandate goals — maximum employment and stable prices,” Powell noted. However, he acknowledged that “in any case, inflation is still too high,” and it will take more than a few months of positive data to foster confidence in sustained inflation decline towards the desired goal.
Meanwhile, the benchmark U.S. 10-year Treasury yield came close to reaching the highly watched 5% level that was last achieved in 2007, reaching a high of 4.996% on Thursday. Following Powell’s statement, the yield remained near this level.
In other news, weekly jobless claims remained below 200,000, indicating ongoing strength in the economy despite higher interest rates.
Investors also turned their attention to the latest earnings reports. According to FactSet, over 15% of companies in the S&P 500 have already reported their earnings for the current season. Of those, more than 74% have surpassed Wall Street expectations.
Tesla, the leading electric vehicle company, experienced a significant setback, with its shares declining by over 9%. The decline was attributed to the company falling short of analyst expectations on earnings and revenue for the third quarter. Tesla’s CEO, Elon Musk, also cautioned that the company’s Cybertruck would not generate significant positive cash flow over a year after production begins.
On a positive note, shares of streaming giant Netflix surged by over 15% after reporting third-quarter earnings that exceeded estimates. The company benefited from strong ad-tier subscriptions.
Apart from technology stocks, AT&T witnessed a rise of over 6% after outperforming expectations for the third quarter, while investment firm Blackstone saw a decline of 6% due to a weaker-than-expected financial report.
This article has been written with contributions from CNBC’s Jeff Cox and Gina Francolla.
[Note: This article has been corrected to mention that LSEG is formerly known as Refinitiv. The previous version misstated the company’s previous name.]