S&P 500 rises as Powell says we have ‘ground to cover’ before Fed changes easy policy

The S&P 500 turned higher on Wednesday after the Federal Reserve Chairman Jerome Powell said substantial economic improvement is needed for the central bank to start dialing back its easy-money policies.

The broad equity benchmark erased earlier losses and inched up 0.2%. The tech-heavy Nasdaq Composite climbed 0.8%. The Dow Jones Industrial Average dipped 15 points. The major averages pulled back from their records in the previous session, snapping a five-day winning streak.

The Federal Open Market Committee kept interest rates in a target range near zero, reiterating its view that the economy continues to “strengthen” despite the spread of the delta coronavirus strain. Powell stressed that the economy a good deal away from achieving the Fed’s dual mandates of stable prices and maximum employment.

“We have some ground to cover on the labor market side,” Powel said in a press conference. “I think we’re some way away from having had substantial further progress toward the maximum employment goal. I would want to see some strong job numbers.”

The central bank started purchasing at least $120 billion a month in bonds in December until “substantial further progress” had been made on employment and inflation.

“Since then, the economy has made progress toward these goals, and the Committee will continue to assess progress in coming meetings,” the post-meeting statement said.

Boeing shares climbed about 5% after the manufacturer posted its first profit since the third quarter of 2019 thanks to a rebound in aircraft deliveries. Pfizer shares rose about 2% after the company reported stronger-than-expected earnings and raised its 2021 sales forecast for the Covid vaccine.

Investors also digested a host of quarterly results from megacap tech names. Google-parent Alphabet popped more than 4% after the tech giant posted quarterly results, registering a 69% jump in advertising revenue.

Apple shares dipped 0.4% after CEO Tim Cook warned that silicon “supply constraints” will affect sales the iPhone as well as the iPad. The company did beat top- and bottom-line estimates and said iPhone sales surged 50% year over year.

Microsoft saw its shares rise 1% after reporting an earnings beat despite a dip in revenue from its Windows division.

The busiest week of earnings continues on Wednesday with Qualcomm, Facebook, Ford and PayPal among the names on deck. Of the S&P 500 companies that have reported quarterly results thus far, 89% have topped earnings estimates, while 86% have exceeded revenue expectations, according to data from Refinitiv.

The major averages are still on track to end the month higher. The S&P is up 2.4% for July, while the Nasdaq Composite and Dow have gained 1.1% and 1.6%, respectively.