S&P 500 Hits New High on Powell’s Remarks Crossing Wall Street

S&P 500 Hits New High on Powell’s Remarks

The stock market has regained some ground it lost yesterday. The S&P 500 has been up to another all-time intra-day high this morning. We had some bank earnings yesterday and today.

Bank of America is down about 4% this morning. The bank reported earnings of 80 cents per share which was a three-cent beat. However, BAC missed its revenue estimate.

Wells Fargo had a very good quarter. For Q2, the bank earned $1.38 per share. That was 40 cents above estimates. The stock is about flat so far today.

Jerome Powell is testifying before Congress today and tomorrow. His full remarks are here. Here’s a sample:

Over the first half of 2021, ongoing vaccinations have led to a reopening of the economy and strong economic growth, supported by accommodative monetary and fiscal policy. Real gross domestic product this year appears to be on track to post its fastest rate of increase in decades. Household spending is rising at an especially rapid pace, boosted by strong fiscal support, accommodative financial conditions, and the reopening of the economy. Housing demand remains very strong, and overall business investment is increasing at a solid pace. As described in the Monetary Policy Report, supply constraints have been restraining activity in some industries, most notably in the motor vehicle industry, where the worldwide shortage of semiconductors has sharply curtailed production so far this year.

Conditions in the labor market have continued to improve, but there is still a long way to go. Labor demand appears to be very strong; job openings are at a record high, hiring is robust, and many workers are leaving their current jobs to search for better ones. Indeed, employers added 1.7 million workers from April through June. However, the unemployment rate remained elevated in June at 5.9 percent, and this figure understates the shortfall in employment, particularly as participation in the labor market has not moved up from the low rates that have prevailed for most of the past year. Job gains should be strong in coming months as public health conditions continue to improve and as some of the other pandemic-related factors currently weighing them down diminish.

As discussed in the Monetary Policy Report, the pandemic-induced declines in employment last year were largest for workers with lower wages and for African Americans and Hispanics. Despite substantial improvements for all racial and ethnic groups, the hardest-hit groups still have the most ground left to regain.

Inflation has increased notably and will likely remain elevated in coming months before moderating. Inflation is being temporarily boosted by base effects, as the sharp pandemic-related price declines from last spring drop out of the 12-month calculation. In addition, strong demand in sectors where production bottlenecks or other supply constraints have limited production has led to especially rapid price increases for some goods and services, which should partially reverse as the effects of the bottlenecks unwind. Prices for services that were hard hit by the pandemic have also jumped in recent months as demand for these services has surged with the reopening of the economy.

On our Buy List, shares of Middleby (MIDD) are up again. This could be our fourth up day in a row. The shares are on track to close at a two-month high.

Broadridge Financial Solutions (BR) made a new all-time high yesterday. The stock is up about 9% in the last month.

Posted by Eddy Elfenbein on July 14th, 2021 at 10:42 am

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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