Wall Street Close: Trades mixed amid Powell versus reflation drama

• US equity rebound fades on mixed concerns, upbeat PPI.
• Powell says a “lots of notice” would be given before policy adjustment.
• BOC’s tapering, hawkish RBNZ also test market bulls as Biden stimulus lingers.
• US banks stay optimistic despite missing profit estimates.

US stocks posted mixed closing on Wednesday, fading early day gains, as bulls reassess Powell-led optimism on contrasting signals and data.

Read: Forex Today: Powell sends the dollar down

Fed Chair Jerome Powell mentioned that a “lots of notice” would be given before adjusting the monetary policy in his bi-annual testimony. The central banker also signaled that the US economic recovery is still in its nascent stage while repeating a “transitory” outlook for inflation. Following his comments, equities rallied but strong prints of the US Producer Price Index (PPI) for June probed upside momentum. That said, US 10-year Treasury yields dropped 6.6 basis points, marking the heaviest slump in a week, closing Wednesday’s books around 1.35%.

Also challenging the markets were looming uncertainty over US President Joe Biden’s stimulus package even as Reuters conveyed Democrats’ readiness for a $3.5 trillion deal. Furthermore, worsening virus conditions and further tightening of the monetary policy at the Bank of Canada (BOC) not to forget hints of tapering by the Reserve Bank of New Zealand (RBNZ), also weighed on stocks.

Amid these plays, Dow Jones Industrial Average (DJI) and S&P 500 closed the day’s books with mild gains, up 0.13% and 0.12% to 34,933.23 and 4,374.38 respectively. It’s worth noting that S&P 500 refreshed the record top with 4,393.68. On the contrary, Nasdaq dropped 0.22% or 32.7 points to 14,645.

In company-specific news, American Airlines gained near 3.0% amid economic recovery hopes but Peloton had to bear the burden of Wedbush downgrade. Further, Bank of America (BofA), Citigroup and Barclays manage to print profits for Q2 2021, even using the reserves, while keeping optimism for the next earnings report.

Looking forward, investors will keep their eyes on Powell’s testimony 2.0 while seeking more clarity over the stimulus and covid conditions for fresh impulse.