Fed's Powell says high rates could hurt growth

Traders work on the floor of the New York Stock Exchange in New York City on April 26, 2023.

Michael M. Santiago | Getty Images

This report comes from today’s CNBC Daily Open, our global market newsletter. CNBC Daily Open brings investors up to date on everything they need to know, no matter where they are. Like it? You can subscribe here.

What you need to know today

On the way to records
The
S&P 500 and the Nasdaq Composite their way to intraday and record closings as Federal Reserve Chairman Jerome Powell warned about the dangers of keeping interest rates high. Nvidia rose 2.48% after KeyBanc raised its price target on the AI ​​chipmaker. Apple climbed to a record high for the sixth day in a row. The Dow Jones Industrial Average lost 52 points. The yield on the 10-year Treasure Chest remark rose while Powell said progress had been made on inflation. Oil prices fell for the third day in a row.

Growth in danger
Powell warned that keeping interest rates high for too long could harm economic growth. Despite the recent slowdown, he noted that the economy and labor market remain strong. Powell emphasized progress in bringing inflation down toward the central bank's 2 percent target. “At the same time, given the progress made in lowering inflation and cooling the labor market over the past two years, elevated inflation is not the only risk we face,” Powell said in prepared remarks. “Reducing policy too late or too little could unnecessarily weaken economic activity and employment.”

Aid to Ukraine
President Joe Biden new commitments announced improve Ukraine's air defenses against Russia during a speech commemorating the 75th anniversary of NATO. “Putin wants nothing less — nothing less — than the total subjugation of Ukraine, to end Ukrainian democracy,” Biden said. “We know Putin will not stop at Ukraine. But make no mistake: Ukraine can and will stop Putin, especially with our full collective support.” The aid includes new Patriot missile system components from the U.S., Germany, Romania, the Netherlands and others, with Italy donating an additional SAMP-T missile system. More air defense supplies will be distributed in the coming months.

Boeing slides
Shares of Boeing fell 1.4% after the aircraft manufacturer delivered 44 commercial jets in Junethe highest monthly total this year, but a 27 percent annual decline due to legal and production issues. Despite supply chain issues and increased regulatory scrutiny after a 737 Max 9 incident, Boeing aims to expand production by the end of the year. The company agreed to plead guilty to criminal fraud in connection with two 737 Max crashes that jeopardized government contracts.

Asia mixed, China inflation rises
Markets in the Asia-Pacific region were mixed as investors combed through economic data. Mainland China's CSI 300 was little changed as consumer price inflation rose less than expected and producer prices fell, raising concerns about deflation in the world's second-largest economy. Hang Seng Index had changed little, while South Korea's Cospi and that of Australia S&P/ASX 200 decreased. Japan's export-heavy Nikkei 225 approached an intraday high as wholesale inflation accelerated.

[PRO] iPhone 16 upcycle
Bank of America is predicting an “upcycle” for Apple's supply chain ahead of the iPhone 16 launch, citing expected design changes and AI improvements. Here are some of the BofA's Top Rated Stocks to play as the iPhone evolves.

it comes down to

Boeing must hope that it can finally put an end to the security crisis, but the latest data show it has a steep challenge. The company has delivered 175 planes so far this year, compared with European rival Airbus's 323 deliveries in the first half.

Boeings guilty plea to criminal fraud for two deadly 737 Max crashes and a $487 million fine is just a fraction of the $24.78 billion the victims' families are seeking, plus Boeing's $77.8 billion in revenue in 2023. Victims' families plan to ask the judge to reject the deal.

“This sweetheart deal fails to acknowledge that 346 people died because of Boeing's conspiracy,” said Paul Cassell, the families' attorney. “The deadly consequences of Boeing's crime are being hidden.”

Boeing shares fell 1.4% to $183.24 on Tuesday. That's up from a low of $159.70 in April, but still down nearly 30% for the year. Meanwhile, the S&P 500 rose just 0.07%, closing the year at a record high for the 36th time in a row. The lack of breath kept gains in check.

Wall Street's attention was focused on Powell's testimony on Capitol HillWhile acknowledging that keeping rates too high for too long could jeopardize growth, Powell said: “More good data would increase our confidence that inflation is moving toward 2% on a sustained basis.”

More inflation data is due on Thursday, followed by producer prices on Friday. Powell's comments did little to change market expectations that the Fed would cut rates in September and again at the end of the year.

However, investors expect a stock market boost due to interest rate cuts can be disappointed, says Adam Crisafulli of Vital Knowledge.

“Our stance remains cautious on the SPX as investors are overly optimistic about the strength of the Fed cuts and not focused enough on the slowing momentum in the economy,” he wrote. “The case for rate cuts in September is strong, but a modest easing cycle, such as the one that is likely to come, will not be enough to immediately stop the growth slowdown that is currently underway.”

CNBC's Jeff Cox, Brian Evans, Sarah Min, Spencer Kimball, Rebecca Picciotto, Holly Ellyatt, Fred Imbert, Michelle Fox, Todd Haselton, Yun Li, Evelyn Cheng and Lim Hui Jie contributed to this report.

Related Posts

  • World
  • July 12, 2024
  • 1 views
  • 4 minutes Read
More Democrats are calling on the president to resign

U.S. President Joe Biden waves during a news conference during the 75th anniversary of NATO, in Washington, U.S., July 11, 2024. Nathan Howard | Reuters President Joe Biden's re-election campaign…

  • World
  • July 12, 2024
  • 3 views
  • 3 minutes Read
Asian Markets: US CPI, Yen Intervention

Japanese banknotes of 1,000 yen, 5,000 yen and 10,000 yen are on display in Kyoto, Japan. Kentaro Takahashi | Bloomberg | Getty Images Japanese Nikkei 225 led the losses in…

Leave a Reply

Your email address will not be published. Required fields are marked *

You Missed

Weight loss coach shares catchy fitness trick on TikTok, while nutritionist has her own take

  • July 12, 2024
Weight loss coach shares catchy fitness trick on TikTok, while nutritionist has her own take

More Democrats are calling on the president to resign

  • July 12, 2024
More Democrats are calling on the president to resign

Women inherit $9 trillion

  • July 12, 2024
Women inherit $9 trillion

How to make a walkie talkie for your dog?

  • July 12, 2024
How to make a walkie talkie for your dog?

Bezoek een landhuis van 60 miljoen dollar in Delray Beach, Florida

  • July 12, 2024
Bezoek een landhuis van 60 miljoen dollar in Delray Beach, Florida

Asian Markets: US CPI, Yen Intervention

  • July 12, 2024
Asian Markets: US CPI, Yen Intervention

AT&T says hackers have gained access to the phone calls and text messages of nearly all of its mobile customers

  • July 12, 2024
AT&T says hackers have gained access to the phone calls and text messages of nearly all of its mobile customers

How to Spend the Best Sunday in LA, According to Lisa Ann Walter

  • July 12, 2024
How to Spend the Best Sunday in LA, According to Lisa Ann Walter

Hydrogen flight looks set for takeoff with new developments

  • July 12, 2024
Hydrogen flight looks set for takeoff with new developments

Top Benefits of DevOps You Can’t Afford to Ignore

  • July 12, 2024
Top Benefits of DevOps You Can’t Afford to Ignore

Wells Fargo WFC Q2 2024 Earnings

  • July 12, 2024
Wells Fargo WFC Q2 2024 Earnings