S&P 500 rises to a record as the Fed stays the course with easy policy, Apple hits all-time high

The S&P 500 rose to a new intraday record Wednesday after Federal Reserve Chairman Jerome Powell said in prepared remarks that the central bank is not close to altering its easy monetary policies.

The broad index traded roughly 0.3% higher. The Dow Jones Industrial Average added around 70 points, or 0.2%. The Nasdaq Composite added about 0.4%, boosted by gains in technology stocks. Apple and Google-parent Alphabet shares both hit all-time highs.

“The markets have gotten very accustomed to ‘low rates for longer’ and Powell’s comments today don’t necessarily change that,” Diane Swonk, chief economist at Grant Thornton, said. “The reality is the Fed has to deal with whatever comes in.”

Powell will say in his required semiannual testimony before Congress on Wednesday that the central bank can wait before it starts to ease its bond purchases despite surging inflation readings, according to remarks released before his testimony. In his prepared statement, Powell said he still expects inflation to moderate.

“At our June meeting, the Committee discussed the economy’s progress toward our goals since we adopted our asset purchase guidance last December. While reaching the standard of ‘substantial further progress’ is still a ways off, participants expect that progress will continue,” Powell said in the prepared remarks.

The central bank chief is set to speak before the House Committee on Financial Services at noon ET. He is scheduled to testify before the Senate on Thursday.

The yield on the 10-year Treasury fell after Powell’s remarks, continuing its decline in recent months. Yields fell even as a reading on producer prices from June showed higher than expected inflation. This follows the biggest jump in the consumer price index since 2008, released on Tuesday.

Second-quarter earnings reports from big banks and other major companies also continued on Wednesday. As investors focus on Fed headlines and inflation readings, earnings so far this week have not led to major stock moves despite better-than-expected results.

All 12 of the S&P 500 companies that have posted quarterly fiscal results this week have beat earnings-per-share estimates, but the group is averaging a 0.56% decline after reporting.

The S&P 500 is up more than 16% in 2021 and more than 37% in the past 12 months, signaling good news might be priced into shares. S&P 500 profit growth is expected to total 64% year-over-year for the quarter, according to analyst estimates collected by FactSet.

Bank of America shares fell after it reported second-quarter revenue of $21.6 billion, just under the $21.8 billion estimate from Refinitiv. Low interest rates knocked net interest income by 6%, the bank said.

BlackRock, the largest asset manager in the world, reported earnings and revenue that topped expectations on Wednesday morning. Shares of BlackRock dropped after the bell.

Shares of Citigroup and Wells Fargo each edged higher after both companies posted better-than-expected second-quarter earnings results.

Delta Air Lines shares ticked higher after the company reported its first quarterly profit of $652 million since 2019, boosted by federal aid. The airline also said domestic leisure demand has fully recovered and corporate travel increased in the quarter.

American Airlines shares jumped after the carrier forecast better revenue and a narrower loss than its previous estimate for the second quarter. The company is set to report quarterly fiscal results on July 22.

Meanwhile, Apple shares jumped to a record high on Wednesday. JPMorgan added the tech giant to its focus list and increased its estimates for iPhone 12 production. The firm also raised its price target for Apple and believes the stock can gain 20% in the next 12 months.

The Dow on Tuesday fell 107 points, or 0.3%, retreating from a record close near 35,000 Monday. The S&P and Nasdaq Composite hit all-time intraday highs on Tuesday before giving back those gains and ultimately closing lower. The S&P 500 dipped 0.35%, while the Nasdaq Composite shed 0.38%, each posting their first negative session in three.

The decline came after the Labor Department said inflation last month advanced at its fastest pace in nearly 13 years. The consumer price index jumped 5.4% from a year earlier, which was above expectations of a 5% increase, according to economists surveyed by Dow Jones. However, since a significant portion of the overall increase came from a jump in used car prices, some were quick to say the inflation will likely be transitory.

Amid a down day on Wall Street, the S&P 500 tech sector bucked the negative trend and closed at a fresh all-time high. The 10 other S&P sectors dipped, with real estate leading the losses.

The hot inflation report overshadowed strong second-quarter earnings reports. JPMorgan and Goldman Sachs kicked off earnings season on Tuesday, with both banks beating top and bottom line estimates. PepsiCo also topped estimates.