US stocks rise ahead of testimony from Fed Chair Powell

Flags adorn the facade of the New York Stock Exchange, Wednesday, June 16, 2021. Stocks are opening mostly lower on Wall Street Tuesday, June 22 as traders wait for more clues on the Federal Reserve's thinking on inflation. (AP Photo/Richard Drew)

Stocks are rising on Wall Street Tuesday as traders wait for more clues on the Federal Reserve’s thinking on inflation.

The S&P 500 index rose 0.4% as of 1:14 p.m. Eastern. The Dow Jones Industrial Average rose 21 points, or 0.1%, to 33,901 and the Nasdaq rose 0.5%.

Technology companies were the biggest gainers. A mix of companies that rely on direct consumer spending, including Home Depot and Best Buy, were also making solid gains. Real estate companies and utilities edged lower.

Stocks rebounded on Wall Street Monday, clawing back most of their sharp loss from last week, as the initial jolt passes from the Federal Reserve’s reminder that it will eventually offer less help for markets. The S&P 500 recovered nearly three-quarters of its worst weekly loss since February.

Investors have been closely watching any signal that could shed more light on just how high inflation could rise and for how long, from commodity prices to wages and economic reports.

“What investors are going to have to do is just buckle up,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management. “The data is going to be very noisy; we could get some numbers that create some anxiety."

Nixon said rising inflation will likely be temporary as the economy continues its recovery, as the Fed has been saying, but it could be a bumpy summer as far as inflation signals and concerns. The key, she said, is to stay calm and not overreact to any one signal or piece of data.

Fed Chair Jerome Powell will testify before Congress later Tuesday on the central bank’s response to the coronavirus pandemic. Investors remain focused on the issue of inflation and will be listening closely to Powell's comments on this issue. The U.S. economy is recovering from the pandemic quickly as vaccines have rolled out, but it’s caused prices for basic materials to rise noticeably in recent months.

In prepared remarks, Powell reaffirmed the Fed’s position that while inflation has accelerated recently, the Fed expect the effects to be transitory.

Powell’s remarks follow a meeting of the Fed policymakers last week, when central bank officials signaled they were prepared to raise rates earlier than they had previously suggested.

Bond prices didn't move much. The yield on the 10-year Treasury note remained at 1.48%.

GameStop rose 4.9% after the company announced it had raised $1 billion in selling new shares to investors. Financing announcements helped lift shares for several other companies. Tupperware jumped 12.2% after announcing a $250 million stock buyback and software company Splunk rose 9.8% after announcing a $1 billion investment from Silver Lake.

The price of Bitcoin continued to fall, adding to its losses from the previous couple of weeks. The digital currency was trading at about $32,000, according to Coindesk. Earlier in the day, it went below $30,000, about where it started the year. It traded above $60,000 in mid-April.