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Fed Chairman Jerome Powell tries to abate inflation fears saying that the consumer price surge is a temporary event. Wall Street reacted positively to Powell’s statement closing in the green.
On Tuesday, June 22, the US stock market indices continued showing new highs for the second consecutive day. The tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) surged to an all-time high whereas S&P 500 (INDEXSP: .INX) ended just short of its new closing record.
The Dow Jones Industrial Average (INDEXDJX: .DJI) also gained 68 points closing at 33,945.58 levels. On the contrary, the crypto market came under severe pressure. Bitcoin (BTC) crashed more than 10% slipping to $29,000 levels wiping off all its 2021 gains.
Stocks that Contribute to US Stock Market Indices Stock
Technology shares again proved to be the key leaders offering strong support to the market. Streaming giant Netflix (NASDAQ: NFLX) gained 2.38 with its stock price closing above $500 levels. Even Facebook Inc (NASDAQ: FB) stock gained 2% while Apple Inc (NASDAQ: AAPL), Amazon.com Inc (NASDAQ: AMZN), and Microsoft Corporation (NASDAQ: MSFT) all gained 1% each.
The market has been relatively volatile as Wall Street investors are carefully watching the Fed comments and the data for economic recovery. In a note to investors, Invesco chief global market strategist Kristina Hooper said:
“This is a precarious time – stocks have gone a relatively long period without any major sell-off, and there is heightened sensitivity to every utterance from the Fed as it attempts to transition to the start of normalization”.
Fed Chairman Shrugs Off Inflation Worries
On Tuesday, June 22, Federal Reserve chairman Jerome Powell shrugged off inflation worries saying that the current price surge is only temporary. This could possibly have triggered some relief buying on Wall Street on Tuesday. In a statement, the Fed chairman said:
“Since we last met, the economy has shown sustained improvement. Widespread vaccinations have joined unprecedented monetary and fiscal policy actions in providing strong support to the recovery. Indicators of economic activity and employment have continued to strengthen, and real GDP this year appears to be on track to post its fastest rate of increase in decades.”
In May 2021, consumer prices surged 5% in comparison to a year ago. Most of the gains occurred in categories like airplane tickets, cars, hotel rooms, etc. This comes as the demand surge amid the economic reopening. Powell said:
“Those are things that we would look to, to stop going up and ultimately to start to decline as these situations resolve themselves,” Powell said. “They don’t speak to a broadly tight economy – the kind of thing that has led to high inflation over time.”
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