Stocks climb ahead of more Powell testimony

U.S. stocks struggled to find direction in Wednesday’s trading session, following two labor prints that showed the labor market remains tight amid persistent inflation.

Wall Street is awaiting more testimony from Federal Reserve Chairman Jerome Powell, this time before the House Financial Services Committee.

The S&P 500 (^GSPC) fell 0.1%, while the Dow Jones Industrial Average (^DJI) fell 0.3%. Contracts on the technology-heavy Nasdaq Composite (^IXIC) fell near the fixed line.

Bond yields fell slightly in line with a stronger dollar. The yield on the benchmark 10-year US Treasury fell to 3.92% on Wednesday morning.

U.S. stocks fell on Tuesday after Powell said in testimony to the Senate Banking Committee that interest rates could rise “higher” than expected as the Fed continues its persistent fight against inflation.

Powell’s comments on Capitol Hill sparked a 1.5% selloff in shares, according to JP Morgan’s trading desk. Tuesday’s losses saw all sectors fall, with financials and real estate posting the biggest declines of the day.

U.S. Federal Reserve Board Chairman Jerome Powell testifies before the Senate Banking, Housing, and Urban Affairs Committee on

US Federal Reserve Board Chairman Jerome Powell testifies before the Senate Banking, Housing and Urban Affairs Committee. (Photo by Mandel NGAN/AFP) (Photo by MANDEL NGAN/AFP via Getty Images)

Treasury yields were higher, with the 2-year yield exceeding 5%, while the spread between 10-year and 2-year U.S. Treasury yields reversed for the first time since September 1981. Strategists say from Deutsche Bank, reaching this level signals that a recession could be underway or has occurred within a maximum of eight months.

“Powell’s speech indicates that the Fed will rely heavily on near-term data for upcoming rate decisions,” Michael Feroli, chief U.S. economist at JP Morgan, wrote in a note Wednesday morning.

“With January’s macro data printing mostly on the hawkish side, Friday’s NFP and next Tuesday’s CPI are the most critical catalysts for the Fed’s decision between 25 and 50 basis points,” Feroli added.

Still, on the economic data side, ADP’s monthly reading on private payroll growth rose 242,000 in February, above consensus expectations for 200,000. workers who stayed in their jobs, which slowed to 7.2% last month, the slowest pace of growth in the past year.

“There is a trade-off in the labor market right now,” Nela Richardson, chief economist, ADP, said in the press release. “We are seeing robust hiring, which is good for the economy and workers, but wage growth is still quite high. The modest slowdown in wage increases, on its own, should not bring inflation down. quickly in the short term.”

Meanwhile, the U.S. monthly international trade deficit rose to $68.3 billion in January, below the consensus deficit of $68.7 billion, as imports rose more than exports, the Bureau said. American Economic Analysis and the United States Bureau of the Census.

Another highlight on Wednesday morning was January’s job openings report, which rose to 10.82 million, above expectations of 10.54 million, the Bureau of Labor Statistics reported.

The February jobs report released on Friday will contain more clues about the strength of the economy. Economists expect 215,000 new jobs to be added to the economy, a slower pace compared to January’s blistering 517,000 job creations.

The unemployment rate should remain at 3.4%. Another key reading will be wage growth, with a 0.3% month-over-month increase in projected average hourly earnings and 4.7% over the past year.

In individual stock moves, Occidental Petroleum Corporation (OXY) gained nearly 2% on Wednesday morning after a regulatory filing revealed that Warren Buffet’s Berkshire Hathaway bought nearly 6 million shares of the oil company these days, increasing its stake in the company to 200.2 million. shares worth $12.2 billion.

Shares of CrowdStrike Holdings, Inc. (CRWD) rose 7% on Wednesday after the security software provider reported fourth-quarter results that beat analysts’ expectations and released stronger guidance for the fiscal first quarter. .

Shares of Tesla (TSLA) fell nearly 2% as Berenberg analyst Adrian Yanoshik cut his rating on the buy-to-hold stock, citing “based on misplaced fears of a war prices – seems to have been accepted by the market,” Yanoshik noted.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv

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