New York Stock Market Mixed Ahead of June CPI Release... S&P and Nasdaq Rise on Powell's Remarks

Powell Signals Policy Shift from Inflation to Employment
Focus on June CPI to Be Released on the 11th

The three major indices of the U.S. New York stock market showed mixed trends in early trading on the 10th (local time). Following Federal Reserve (Fed) Chair Jerome Powell's congressional remarks the previous day, which heightened expectations for a rate cut in September, market attention is now focused on the June Consumer Price Index (CPI) data to be released the next day.

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As of 11:29 a.m. at the New York Stock Exchange (NYSE) on the day, the Dow Jones Industrial Average was down 0.19% from the previous close, standing at 39,367.54. The large-cap-focused S&P 500 index was up 0.34% at 5,596.22, and the tech-heavy Nasdaq index was trading 0.46% higher at 18,514.2.

By individual stocks, Taiwan's TSMC was up 2.91%. The stock surged after TSMC's Q2 revenue of 673.51 billion New Taiwan dollars far exceeded market research firm LSEG's estimate of 654.27 billion New Taiwan dollars. AI leader Nvidia rose 2.14%. Tesla, which had risen for 10 consecutive trading days until the previous day, fell 0.14%.

Chairman Powell appeared before Congress for two consecutive days, first to the Senate and then to the House, to deliver the semiannual monetary policy report. He expressed concerns that keeping interest rates too high for too long could jeopardize economic growth. Powell stated, "High inflation is not the only risk we face," adding, "If policy constraints are eased too late or too little, economic activity and employment could weaken excessively." Analysts interpret this as a sign that the Fed's monetary policy focus is gradually shifting from price stability to full employment, following easing inflation and signals of labor market slowdown. If inflation and employment indicators continue to slow over the next two to three months, a foundation for a rate cut at the September Federal Open Market Committee (FOMC) meeting is expected to be established.

Thierry Wiseman, Global FX and Rates Strategist at Macquarie, said, "Until this week, stock traders were willing to ignore downside risks related to recent slowdowns in U.S. and overseas economic activity indicators," adding, "Stock indices rose on new liquidity based on the assumption that the Fed would start or continue cutting policy rates this year."

Now, market attention is focused on the June CPI data, which will support the rationale for the Fed's rate cut. The CPI for last month, scheduled for release on the 11th, is expected to rise 3.1% year-over-year, below May's increase of 3.3%. After the CPI increases in April and May (3.4% and 3.3%, respectively) both fell short of the previous months' figures (3.5% and 3.4%), the key question is whether the three-month consecutive slowdown in CPI has continued. Particular attention is on whether the persistently high housing cost inflation, a component of the CPI, has eased. Core CPI, which excludes volatile food and energy prices, is expected to have risen 3.4% in June, matching May's increase.

On the 12th, the June Producer Price Index (PPI) will be announced. The wholesale price index, PPI, influences the retail price index, CPI, over time. The PPI is forecasted to have risen 0.1% month-over-month in June, surpassing May's -0.2% figure.

Mark Hacket, Chief Investment Researcher at Nationwide, said, "Despite the flood of data this week?including Powell's testimony, CPI and PPI reports, and corporate earnings season?the market remains calm," adding, "This calm could be affected depending on the CPI data."

U.S. Treasury yields are moving within a narrow range. The 10-year U.S. Treasury yield, a global bond yield benchmark, stands at 4.29%, while the 2-year Treasury yield, sensitive to monetary policy, is at 4.62%, both trading near the previous session's levels.

International oil prices are steady as the Organization of the Petroleum Exporting Countries (OPEC) maintains its oil demand forecasts for this year and next. West Texas Intermediate (WTI) crude oil rose $0.11 (0.11%) from the previous session to $81.52 per barrel, while Brent crude, the global oil price benchmark, increased $0.01 (0.01%) to $84.67 per barrel.