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U.S. stocks are wobbling on prospect of more interest rate hikes

Published 22/06/2023, 15:08
© Reuters.
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Investing.com -- U.S. stocks were wobbling as Federal Reserve Chair Jerome Powell headed back to Capitol Hill for his second day of testimony.

At 11:45 ET (15:45 GMT), the Dow Jones Industrial Average was down 13 points or flat, while the S&P 500 was up 0.2% and the NASDAQ Composite was up 0.7%

On Wednesday, Powell told lawmakers in the House that the Fed wasn’t done raising interest rates to cool inflation. He is appearing as part of his semi-annual testimony to Congress about the economy.

On Thursday, Powell repeated his message to the Senate that it would be appropriate to raise rates again this year, possibly twice, if the economy performs as expected. He said working families suffer most directly from high inflation.

Powell’s remarks suggested that more rate increases are "a pretty good guess" of what the Fed has planned assuming the economy continues on its current path. Futures traders see a 74% probability of rates rising a quarter of a percentage point at the Fed’s July meeting.

Guided by data

The Fed’s next move will be guided by data, Powell said. Recent inflation data has shown signs that the economy is cooling, while the labor market is holding steady. Initial jobless claims on Thursday were 264,000, the same as the prior week and slightly above expectations.

Shares of Boeing (NYSE:BA) parts supplier Spirit AeroSystems Holdings (NYSE:SPR) fell 9.7% after it said it would suspend production at a plant in Kansas, where workers announced a strike starting this weekend. Boeing shares fell 2.4%.

Darden Restaurants, Inc. (NYSE:DRI) shares fell 1.6% after the parent of Olive Garden gave annual revenue guidance that was above estimates.

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