[1/2]FILE PHOTO – Samples of Japanese yen banknotes are displayed at a National Printing Bureau factory that produces Bank of Japan banknotes at a media event about a new series of banknotes to be launched in 2024 in Tokyo, Japan November 21, 2022 become. REUTERS/Kim Kyung Hoon
NEW YORK, June 28 (Reuters) – Wall Street was mixed and the dollar rallied on Wednesday as Federal Reserve Chair Jerome Powell hinted that two more rate hikes were on the horizon.
The Nasdaq rose, driven by megacap momentum stocks, while the S&P 500 was essentially flat and healthcare stocks dragged the Dow into negative territory.
“There is a lack of near-term catalyst and there are concerns about future earnings and interest rates,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. “We’ve had a big rally in indices this year, so a plateau or a pause doesn’t surprise me in the slightest.”
Powell, who was attending a policy panel with European Central Bank President Christine Lagarde, Bank of England Governor Andrew Bailey and others, hinted that two more hikes in the Fed’s interest rate were likely.
“You have to take these people at their word and they are concerned about going back to core inflation targets,” Tuz added.
According to the CME’s FedWatch tool, financial markets are looking at an 84.3% probability that the central bank will hike the fed funds rate by 25 basis points at the end of its July monetary policy meeting.
The Dow Jones Industrial Average (.DJI) fell 106 points, or 0.31%, to 33,820.74, the S&P 500 (.SPX) was up 1.46 points, or 0.03%, to 4,379.87 and the Nasdaq Composite (.IXIC) is up 76.28 points, up 0.56% to 13,631.96.
European stocks rose as strong US economic data released on Tuesday allayed fears of a sharp economic slowdown, although Lagarde warned the ECB still doesn’t see enough signs of inflation slowing.
The pan-European STOXX 600 index (.STOXX) was up 0.74% and MSCI’s global equity index (.MIWD00000PUS) was up 0.15%.
Emerging market equities lost 0.31%. MSCI’s broadest index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) closed 0.19% lower, while Japan’s Nikkei (.N225) rose 2.02%.
The greenback rebounded from the previous session’s weakness and gained strength as Powell attended the central bank’s monetary policy panel.
The dollar index (.DXY) was up 0.47%, while the euro fell 0.53% to $1.0901.
The Japanese yen weakened 0.33% against the greenback to 144.55 per dollar, while sterling was last traded at $1.2611, down 1.06% on the day.
Government bond yields fell as investors watched Friday’s PCE price index for further signs of a slowdown in inflation.
Benchmark 10-year bonds were last up 5/32 in price from 3.768% late Tuesday to a yield of 3.7504%.
The 30-year bond was last up 3/32 in price from 3.84% late Tuesday to 3.8359%.
Crude oil prices reversed course and were higher of late as a stronger-than-expected decline in US crude inventories offset fears of rate hikes and weakening demand.
US crude was up 1.17% at $68.49 a barrel and Brent was last at $73.34, up 1.14% on the day.
Gold prices hit a three-and-a-half-month low as investors bet on the Fed’s longer-term interest rate policy.
Spot gold fell 0.4% to $1,906.39 an ounce.
Reporting by Stephen Culp; Additional reporting by Nell Mackenzie; Edited by Nick Zieminski
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