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Stocks Rebound, Yields Fall as Fed’s Powell Soothes Market


Global stocks prices closed flat and bond yields edged lower on Wednesday after U.S. Federal Reserve Chair Jerome Powell soothed investor angst by saying a recent inflation spike will fade, helping lift the S&P 500 to a fresh intraday record.


Powell said in congressional testimony that high inflation was for goods and services tied to the reopening and the U.S. economy was “still a ways off” from levels the Fed wanted to see before tapering its stimulus support.


Powell’s remarks relieved investors who were concerned inflation data would prompt the Fed to signal the beginning of tapering, said Michael Arone, chief investment strategist at State Street (NYSE:STT) Global Advisors in Boston.

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U.S. producer prices surged in June to the largest annual gain in more than 10-1/2 years, the Labor Department said. A day earlier, it said consumer prices rose by the most in 13 years.


“Both the CPI yesterday and the PPI today came in considerably above expectations and signaled that inflation continues to run hot,” Arone said. “Even in the face of that Powell has stood steadfast.”


The yield on the 10-year Treasury note slid 6.6 basis points to 1.3492%, the dollar eased and stocks on Wall Street rose, though gains were pared at the close of trading.


MSCI’s all-country world equity index close slightly lower, down 0.03% at 726.09, after earlier matching Tuesday’s record intra-day high of 728.77. The broad pan-European FTSEurofirst 300 index slid 0.1% to close at 1777.58, just below Tuesday’s record high.

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