Stock Market Experiences Volatility: Speculation over Powell Causing Market Fluctuations
In a surprising turn of events, President Trump has stated that it is "highly unlikely" he'll fire Federal Reserve Chair Jerome Powell, following a firestorm of speculation that suggested he had asked House Republicans about the possibility. However, the suggestion of dismissing Powell was made by Trump himself, while public moves and threats have primarily focused on Fed Governor Lisa Cook.
In the corporate world, the latest earnings reports have yielded a mix of results. Bank of America and Morgan Stanley closed lower despite Q2 profit beats, while Johnson & Johnson beat both top- and bottom-line estimates for its second quarter and raised its full-year outlook. Goldman Sachs Group reported a 22% year-over-year jump in second-quarter trading revenue, a figure that David Wagner, head of equity and portfolio manager at Aptus Capital Advisors, described as "what was expected, especially around the sizable trading beat."
The main indexes opened with comfortable gains thanks to encouraging inflation data. The S&P 500 gained 0.3% to 6,263, the Nasdaq Composite rose 0.3% to 20,730, and the Dow Jones Industrial Average added 0.5% to end at 44,254. However, ASML plunged 8.3%, making it the worst S&P 500 stock Wednesday, after the Dutch chip-equipment maker said that it cannot guarantee growth next year.
The inflationary impact of President Trump's tariffs appears to be having a marginal impact, according to Bill Adams, chief economist for Comerica Bank. Adams believes that the "the inflationary impact of tariffs will likely increase in coming months," but the inability of businesses to raise prices too high "may continue to brunt their effect on inflation." This sentiment was echoed by Adams' statement that PPI was considerably cooler than expected in June, with figures lower than what was seen in May.
Core PPI, which excludes volatile food and energy costs, was also flat month to month and 2.5% higher on the year. Johnson & Johnson added 6.2% after forecasting a $200 million hit from tariffs in 2025, down from the $400 million it forecast earlier this year.
In the earnings release, ASML CEO Christophe Fouquet stated that the company is preparing for growth in 2026, but "cannot confirm it at this stage." Despite the uncertainty, the main indexes continue to show signs of resilience, with the prospect of further inflationary impact on the horizon.
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