A Stock Market Holding Pattern

By Connor Smith |  Wednesday, June 29 Calm. U.S. equities ticked up and down on a mixed trading day today as investors tuned in to a summit of central bankers that included Fed Chairman Jerome Powell. Stocks mostly held up after their worst day in two weeks. The Dow Jones Industrial Average rose 0.3%. Both the S&P 500 and the Nasdaq Composite closed slightly lower on the day. Barron's Jack Denton and Ben Levisohn note that Wednesday's mixed bag followed 2% and 3% declines for the S&P 500 and Nasdaq, respectively. Jack and Ben write: It was an encouraging day despite the relatively somnambulant trading, particularly after yesterday’s decline. Though Tuesday started off fine, stocks ended up suffering their worst day in two weeks as investors soured on downbeat signals from the consumer confidence index. “[Not] only did the headline badly miss expectations, falling to a 16-month low, but consumer inflation expectations for the year ahead within the report jumped from an upwardly revised 7.5% to 8.0%, which notably contradicts the pullback in the final University of Michigan data set from last Friday that ignited the latest rally in stocks,” wrote The Sevens Report’s Tom Essaye. Jack and Ben add that Powell's appearance at the conference in Portugal was front and center for investors. They note that the Fed chief stayed on message, saying he would stay focused on fighting inflation even at the risk of a recession. They continue: Ahead of Powell’s remarks, the president of the Cleveland Fed, Loretta J. Mester, told CNBC that the central bank was “just at the beginning” of hiking rates to control inflation. Acknowledging the risk of recession, Mester said she supported another mega-sized 75 basis-point rate hike in July if economic conditions remain unchanged. The typical interest-rate increase is 25 basis points. The economy, however, has been slowing. A revision to first-quarter U.S. gross domestic product data Wednesday showed that it had contracted by 1.6%, larger than the previous estimate for 1.5%. Of course, that is old data. What’s more important is where second-quarter GDP is headed. Right now, it’s expected to grow at just 0.3%. While today's action wasn't the resounding bounce-back from Tuesday's decline that bulls were hoping for, a quiet day is a win enough in this market.

 

DJIA: +0.27 to 31,029.31 S&P 500: -0.07% to 3,818.83 Nasdaq: -0.03% to 11,177.89 The Hot Stock: General Mills +6.4% The Biggest Loser: Carnival -14.1% Best Sector: Health Care +0.9% Worst Sector: Energy -3.5% Disrupting the Game: A Live Conversation With Reggie Fils-Aimé Thursday, June 30 | 1PM ET Barron's deputy editor Alex Eule speaks with former Nintendo of America president Reggie Fils-Aimé as he shares leadership lessons and inspiring stories from his newly released book, Disrupting The Game. Sign up here.