Stocks rise after second day of Powell’s testimony

U.S. stocks closed higher in a choppy session on Thursday after Federal Reserve Chairman Jerome Powell’s second day of testimony on Capitol Hill.

The S&P 500 advanced 1% and the Dow Jones Industrial Average added 195 points, or about 0.6%. The tech-heavy Nasdaq Composite jumped 1.6%.

Stocks are on pace for a bullish week if gains hold through Friday’s close. Last week, the S&P 500 fell 5.8%, the most since March 2020, and marking the benchmark’s second consecutive weekly loss of more than 5%.

US jobless claims remained near a five-month high last week, a tentative sign that the labor market may be starting to cool. The Labor Department reported Thursday that unemployment insurance claims totaled 229,000 for the week ended June 18. Economists polled by Bloomberg expected claims to come in at 226,000.

Elsewhere in the economic data, the preliminary S&P Global Composite Purchasing Managers’ Index (PMI) for June came in at 51.2, the weakest level since January and the index’s second weakest reading since the peak of the pandemic in mid-2020 – another sign of possible economic deterioration.

Fed Chairman Powell is in the spotlight again on Thursday as he delivers remarks on monetary policy and inflation on his second day of testimony before lawmakers.

The head of the U.S. central bank told the Senate Banking Committee in prepared comments on Wednesday that the Fed was “strongly committed” to lowering inflation, slightly toning down language from last week that indicated its fight against the inflation was “unconditional”.

Powell also conceded in his testimony that a recession was a “possibility” and acknowledged that a soft landing would be a “very difficult” feat in the Fed’s fight to restore price stability.

Federal Reserve Chairman Jerome Powell testifies before a Senate Banking, Housing, and Urban Affairs Committee hearing on the ‘Semi-Annual Report on Monetary Policy to Congress’, on Capitol Hill in Washington, DC, USA , June 22, 2022. REUTERS / Elizabeth Frantz

“The Fed is late — it’s been late for a while,” Ryan Belanger of Claro Advisors told Yahoo Finance Live on Wednesday. “They have their work cut out for them. […] the soft landing speech is kind of a myth.”

Earlier this week, BlackRock strategists warned that a recession seems all but inevitable in the Fed’s path forward, arguing that the current interest rate hike campaign is likely to dampen economic growth without necessarily solve the problem of inflation.

“The Fed is not looking for a recession, although in our view one would be needed if it wanted to bring inflation down to 2%,” the firm said.

Other Wall Street heavyweights have also stepped up recession talk, with warnings from economists at Citi, Goldman Sachs and Deutsche Bank this week.

Moving

  • Western Oil (OXY)The stock rose more than 4% at the start of Thursday’s session after Warren Buffett’s Berkshire Hathaway repurchased an additional 9.6 million shares of the oil giant on Wednesday. Berkshire owns about 152.7 million shares of Occidental worth about $8.52 billion after the purchase based on the company’s price at Wednesday’s close.

  • Ritual aid (GDR) Shares gained as much as 6% after the drugstore chain reported a lower first-quarter profit loss than analysts had expected. The company posted an adjusted loss of 60 cents per share, lower than the Bloomberg consensus forecast loss of 66 cents per share. Rite Aid also raised its full-year revenue forecast.

  • Snowflake (SNOW) Shares jumped nearly 9% after JPMorgan moved the stock from neutral to overweight, citing the company’s high standing in a survey of chief information officers. JPMorgan also said it saw upside potential of up to 30% in the stock.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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