US stocks falter as Fed chief addresses Congress again | Your money

NEW YORK (AP) — Stocks gave up an early gain and turned mixed in afternoon trading on Wall Street on Thursday as investors remained focused on inflation and rising interest rates.

The S&P 500 was down 0.2% at 12:45 p.m. Eastern. It was up to 1% earlier. The Dow Jones Industrial Average fell 137 points, or 0.4%, to 30,349 and the Nasdaq rose 0.3%.

Major indices are still on track for weekly gains. Trading has been turbulent in recent weeks and the benchmark S&P 500 index has fallen for 10 of the past 11 weeks. Stocks have oscillated between significant gains and losses as investors try to determine whether a recession is looming.

The Federal Reserve is trying to soften the impact of inflation with higher interest rates, but Wall Street fears it will go too far in slowing economic growth and triggering a recession.

Investors are watching Fed Chairman Jerome Powell’s second day of testimony in Congress. He testified before a House committee on Thursday, a day after testifying before a Senate committee.

“Our whole framework is aimed at keeping inflation expectations well and truly anchored,” he said on Thursday. Powell stressed the importance of bringing inflation back to the Fed’s 2% target. “We can’t fail on this,” he said.

Powell has previously acknowledged that a recession is “certainly a possibility” and that the central bank faces a tougher task amid the war in Ukraine, essentially pushing oil and other commodity prices even higher and making inflation even more pervasive.

On Thursday, Powell stressed, “I don’t think a recession is inevitable.”

Powell is addressing Congress a week after the Fed raised its benchmark interest rate by three-quarters of a percentage point, its biggest hike in nearly three decades. Fed policymakers are also forecasting a faster pace of rate hikes this year and next than they expected three months ago, with its key rate expected to hit 3.8% by the end of the year. of 2023. That would be its highest level in 15 years.

Earlier Thursday, the Labor Department said fewer Americans filed for unemployment benefits last week, though that was slightly more than economists expected. The strength of the job market is a relatively positive element in an otherwise weakening economy, with consumer confidence and retail sales showing increasing damage from inflation.

Companies are, however, reporting slower-than-expected growth, according to IHS Markit surveys. While weak economic data is disheartening for the wider economy, it could also mean that the economy is already slowing enough to allow the Fed to ease its planned rate hikes.

Inflation remains stubbornly high, overwhelming consumers with higher prices on everything from food to clothes. This has caused people to shift spending from big items like electronics to basic necessities. The pressure has been compounded by record gasoline prices that show no signs of abating amid a disconnect in supply and demand.

Big tech and healthcare companies have done much of the heavy lifting. Microsoft rose 1.2% and Johnson & Johnson 1.3%. Energy stocks fell as oil prices fell. Valero fell 6.9%.

Bond yields fell significantly. The yield on the 10-year Treasury note, which helps set mortgage rates, fell to 3.05% from 3.15% on Wednesday night.

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AP Business Writer Stan Choe contributed.

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