By Geoffrey Smith
Investing.com -- U.S. stock markets opened higher on Wednesday after Federal Reserve Chairman Jerome Powell once again shrugged off the spike in U.S. inflation as only temporary.
In prepared remarks ahead of his testimony to Congress, Powell said "there is still a long way to go" to repairing a labor market that is still 7.5 million jobs short of its level before the pandemic erupted in early 2020.
By 9:40 AM ET (1340 GMT), the Dow Jones Industrial Average was up 132 points, or 0.4%, at 35,020 points, while the S&P 500 was up 0.5% and the Nasdaq Composite was up 0.5%. All three indices had fallen on Tuesday in response to the news that U.S. consumer inflation hit an annual rate of 5.4% in June.
Powell's comments were published within minutes of more data showing the U.S. producer prices rose faster than expected in June too. The PPI leaped to 7.3%, due in large measure to companies expanding their margins against a backdrop of product shortages.
Powell was later contradicted by Blackrock (NYSE:BLK) CEO Larry Fink, who told Reuters in an interview: ""I am not calling for 1970's inflation but I just think we are going to have above 2% inflation .. probably closer to 3.5% to 4.0%."
Blackrock's status as the world's largest asset manager means that Fink is seen widely as one of the most influential investors in the world.
Apple (NASDAQ:AAPL) stock gained 1.9% after Bloomberg reported that it has asked suppliers to deliver 90 million iPhones this year, up some 20% from last year. The request implies confidence that the increased rollout of 5G services around the world will generate big demand for upgrades this year. Bloomberg also noted that the company aims to expand market share at the expense of Huawei, whose business has been hobbled by U.S. restrictions on component supplies.
Bank of America (NYSE:BAC) stock fell 2.6% after it reported a set of quarterly numbers that, like JPMorgan (NYSE:JPM)'s on Tuesday, were flattered by the release of past reserves. Net interest income fell 6% on the year, reflecting higher costs and rock-bottom interest rates. The outlook for the latter is unlikely to be helped by the Fed choosing not to withdraw monetary stimulus. Citigroup (NYSE:C) stock rose 1.8% and Wells Fargo (NYSE:WFC) stock rose 0.6% after they released rather better figures.
Airline stocks were also back in favor after selling off in recent weeks amid fears that a new wave of Covid-19 will derail the recovery in air traffic. American Airlines (NASDAQ:AAL) stock rose 6.8% after it said it will be cash-flow positive in the current quarter, the first time it has managed that since the start of the pandemic. United Airlines (NASDAQ:UAL), JetBlue (NASDAQ:JBLU) and Southwest (NYSE:LUV) all rose by more than 1% but Delta Air Lines (NYSE:DAL) stock edged 0.1%, despite reporting a narrower loss than expected.
Elsewhere, Lululemon Athletica (NASDAQ:LULU) stock rose 2.9% after Goldman Sachs (NYSE:GS) added the yogawear maker to its list of 'conviction buys'.