The First Slice for Wednesday, January 12, 2022

(MarketWatch) — U.S. stocks were trading higher Tuesday afternoon, with tech-related shares extending a bounce from the previous session, as investors appeared to take testimony by Federal Reserve Chairman Jerome Powell in stride as they looked for clues to the pace of future rate increases and other plans for tightening monetary policy in 2022.

  • The Dow rose +183.15 or +0.51%
  • The S&P 500 advanced +42.78 or +0.92%
  • The Nasdaq jumped +210.62 or +1.41%

Stocks rose as investors digested Federal Reserve Chairman Jerome Powell testified before the Senate Banking Committee in a hearing on his nomination to serve a second term. 

Powell painted a picture of a soft landing for the economy as the Fed moves to remove emergency stimulus measures and begin raising interest rates, even as market participants increasingly expect the central bank to move much more aggressively than previously anticipated after inflation proved hotter and much more persistent than policymakers had predicted.

Investors also assessed speeches from regional Fed presidents and prepared for Wednesday’s inflation data.

Kansas City Fed President Esther George said in a speech Tuesday that the central bank should speedily reduce its enormous $8.5 trillion pile of bond holdings to help curb the highest U.S. inflation in almost 40 years and discourage undue risk-taking. 

Cleveland Fed President Loretta Mester said she would back a rate increase in March if the economic backdrop resembles current conditions. Mester said she sees the Fed raising rates three times in 2022. George and Mester are both 2022 voting members of the Fed’s policy-setting Federal Open Market Committee.

Tech and other so-called growth stocks — shares of companies whose revenue and earnings are expected to grow faster than average — have been hard hit as Treasury yields have risen in response to expectations the Fed will be much more aggressive than previously anticipated in raising rates in an effort to rein in inflation that is well above target.

  • Shares of American Airlines Group Inc. rose 1.3% after the carrier updated its fourth-quarter guidance to reflect a performance that turned out not to be as bad as expected. 
  • Life-sciences company Danaher Corp. said it expects fourth-quarter core revenue growth to exceed its own guidance, boosted by better-than-expected results at all three of its operating segments. Shares were up 0.6%.
  • Oil futures jumped, with the U.S. benchmark up around 4%.
  • Gold futures rose 1.1% to settle at $1,818.50 an ounce. 
  • Bitcoin was up 2.7%.

Full Loaf Hot LinkOriginal Article By: Christine Idzelis

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