New York Stock Market Mixed Ahead of Powell's Congressional Speech... S&P and Nasdaq Reach Intraday Highs

Powell to Report Semiannual Monetary Policy to Congress on 9-10
CPI for June to be Released on 11

The three major indices of the U.S. New York stock market showed mixed trends in early trading on the 9th (local time). Investors' attention is focused on the remarks of Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), who is appearing before the Senate to deliver the semiannual monetary policy report.

[Image source=Yonhap News]

As of 9:39 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average was down 0.14% from the previous close, standing at 39,289.71. The S&P 500, which is centered on large-cap stocks, rose 0.21% to 5,584.47, and the tech-heavy Nasdaq index increased 0.36% to 18,469.24, hitting an intraday all-time high.

By individual stocks, U.S. chemical company Chemours is up 2.55%. This buying momentum follows UBS upgrading its investment rating from 'neutral' to 'buy.' British oil company British Petroleum (BP) fell 4.57% after announcing an expected loss of up to $2 billion in the second quarter. Apple, which reclaimed the top spot in market capitalization from Microsoft (MS) the previous day, is down 0.21%.

At 10 a.m. today, Chairman Powell will appear before the Senate to report on monetary policy. With recent inflation and employment indicators slowing, all eyes are on how Powell evaluates these trends and what clues he might provide regarding the future path of interest rates. Earlier, on the 2nd, Powell stated, "We are returning to a disinflationary path," but also said, "Before embarking on a policy easing, we want greater confidence that inflation is sustainably moving toward the 2% target." It is expected that he will reaffirm this cautious stance during today's congressional appearance. Powell will also report on monetary policy before the House of Representatives on the 10th.

The market is expected to shift its focus to the June CPI data released on the 11th after reviewing Powell's remarks, which will continue through the next day. Last month's CPI is forecasted to rise 3.1% year-over-year, below May's increase of 3.3%. The CPI growth rates for April and May (3.4% and 3.3%, respectively) both fell short of the previous months' figures (3.5% and 3.4%), raising the question of whether the three-month trend of CPI deceleration has continued. Particular attention will be paid to whether the persistently high housing cost inflation, a key component of CPI, has eased. Core CPI, which excludes volatile food and energy prices, is expected to rise 3.4% in June, matching May's increase.

The day after the CPI release, on the 12th, the June Producer Price Index (PPI) will be published. The wholesale price index, PPI, influences retail prices like CPI over time. PPI is expected to increase 0.1% month-over-month in June, surpassing May's -0.2% figure.

Given the recent cooling of the U.S. labor market, if the June CPI data continues the disinflation trend, expectations for a rate cut in September are likely to strengthen. The U.S. unemployment rate for June, released on the 5th, rose to 4.1%, the highest in two and a half years. Nonfarm payrolls increased by 206,000, a decrease from the previous month's 218,000.

Some voices caution that investors may be overly optimistic about the Fed's potential rate cut in September. Chris Sapelli, founder of U.S. financial information firm Vital Knowledge, said, "Investors are too optimistic about the Fed's rate cuts and are not sufficiently focused on the easing economic momentum, so we remain cautious on the S&P 500 index." He added, "While a rate cut in September is likely, it will probably be a gradual easing cycle, which may not be enough to immediately halt the ongoing economic slowdown."

Corporate earnings reports are also scheduled. Financial stocks such as Citigroup and JP Morgan Chase, as well as PepsiCo and Delta Air Lines, will release their quarterly results.

U.S. Treasury yields are rising slightly. The 2-year U.S. Treasury yield, sensitive to monetary policy, rose 2 basis points (1 bp = 0.01 percentage points) from the previous trading day to 4.63%, while the 10-year U.S. Treasury yield, a global bond benchmark, increased 2 basis points to around 4.29%.

International oil prices are falling as concerns over hurricane damage to oil production facilities in Texas ease. West Texas Intermediate (WTI) crude fell $0.44 (0.53%) to $81.89 per barrel, and Brent crude, the global oil price benchmark, dropped $0.39 (0.45%) to $85.36 per barrel.