Powell’s Testimony Leaves Stocks Unchanged; Steel and Aluminum Producers Surge on Tariff News
Washington, D.C. – US stocks ended the trading day with minimal movement after Federal Reserve Chairman Jerome Powell’s testimony failed to provide any groundbreaking insights.
Powell’s appearance before the Senate Banking Committee was his first since President Trump’s inauguration. Market participants anticipated questions regarding tariffs, the economy, interest rates, and the Fed’s independence. However, none of these topics were addressed directly in Powell’s testimony.
Echoes of January Press Conference
Instead, Powell reiterated the sentiments expressed in the press conference following the Fed’s decision to leave interest rates unchanged in January. He emphasized that the central bank is in no rush to lower rates again.
James Knightley, chief international economist at ING, characterized Powell’s testimony as "a rehash of the press conference following the Fed’s decision to leave rates on hold in January."
Rate Cut Expectations Diminish
Prior to Powell’s testimony, strong jobs reports and inflation surpassing the Fed’s 2% target had tempered expectations for rate cuts this year. Powell’s remarks further solidified this sentiment, leading most economists to revise their forecasts.
Trump’s Tariffs Cloud Market Outlook
Investors remain cautious as they await further details on President Trump’s tariff plans. The imposition of a 25% tariff on steel and aluminum and the threat of reciprocal tariffs have raised concerns about their potential impact on inflation and the economy.
European leaders have expressed a preference for negotiating a deal but have stated their readiness to implement retaliatory tariffs if necessary.
Steel and Aluminum Producers Gain
Shares of steel and aluminum producers continued their upward trajectory, buoyed by Trump’s tariffs. Century Aluminum, United States Steel, Nucor, and Alcoa extended their gains from Monday.
Economic Data Ahead
Key economic data releases scheduled for this week include consumer inflation data on Wednesday and producer price index data on Thursday. Economists expect overall inflation to increase by 2.8% year-over-year, while producer prices are projected to rise by 0.3% month-over-month.
Earning Season Progress
Corporate earnings reports have been generally positive thus far. According to LSEG data, over 76% of S&P 500 companies that have reported quarterly results have exceeded analysts’ earnings expectations.
SEC’s Crypto Stance Under Scrutiny
In a separate development, the Securities and Exchange Commission (SEC) requested a pause in its case against cryptocurrency exchange Binance. This move signals a potential shift in the Trump administration’s stance on cryptocurrencies, which had been perceived as less favorable under the previous administration.
Market Performance
The broad S&P 500 index gained a marginal 0.034% or 2.06 points, closing at 6,068.50. The Dow Jones Industrial Average edged up by 0.28% or 123.24 points, reaching 44,593.65. In contrast, the tech-laden Nasdaq Composite lost 0.36% or 70.01 points, ending the day at 19,644.26.
The benchmark 10-year yield rose to 4.537% on the prospect of delayed rate cuts.
