Here Are 3 Hot Things to Know About Stocks Right Now

  • The S&P 500 briefly hit 3,000 for the first time on Wednesday after remarks from Federal Reserve Chairman Jerome Powell suggested the Fed would cut interest rates at its meeting at the end of July.
  • Shares of Levi Strauss (LEVI) fell after the jeans maker posted fiscal second-quarter adjusted earnings ahead of forecasts but indicated sales likely would slow in the second half of the year. Levi Strauss is Real Money's Stock of the Day.
  • Comcast (CMCSA - Get Report) shares rose after analysts at Goldman Sachs raised their rating on the stock and added the company to their "conviction buy" list.

Wall Street Overview

Stocks closed up but off earlier highs Wednesday after Federal Reserve Chairman Jerome Powell and FOMC minutes suggested the central bank would cut interest rates.

All three major indexes rose upon the release of Powell's statement to Congress at 8:30 a.m. ET, and they picked up again after the 2 p.m. release of minutes from the Fed's meeting on June 19, which showed that several Fed officials saw a strengthening case for a cut in interest rates. The central bank made no changes to key lending rates at the meeting but signaled the potential for easier policy in the months ahead.

"Today's Fed minutes provided another indication to market participants that the Fed is closer to embarking on a course correction in the direction of monetary policy," said Charlie Ripley, senior investment strategist for Allianz Investment Management. "The idea of 'insurance' rate cuts may be a difficult proposition for some policy makers to grasp, but markets are signaling that a decline in policy rates is required in order to sustain the current economic expansion. Given the muted inflationary environment along with mounting uncertainties, it appears that most committee members are on board to cut the fed funds target in the near future."

The S&P 500 briefly crossed the 3,000 mark for the first time, and ended up 13 points, or 0.45%, to 2,993, while the Nasdaq climbed 0.75% to a record close at 8,202.53. The Dow Jones Industrial Average climbed 76 points, or 0.29%, to 26,860. 

The Dow and Nasdaq both hit all-time highs during the day.

Wall Street believes a 25 basis point rate cut is a certainty at the Fed meeting on July 31, while a more aggressive cut of 50 basis points is less certain.

Powell's remarks come as the central bank's Federal Open Market Committee, which sets monetary policy, is widely expected to cut interest rates later in July for the first time since the financial crisis of 2008.

While the economy has been performing reasonably well for the first half of the year, Powell said "crosscurrents, such as trade tensions and concerns about global growth, have been weighing on economic activity and the outlook."

"If the Fed is thinking in terms of risk management, the Fed may err toward a 50bps cut," said Jim Caron, managing director of global fixed income at Morgan Stanley Investment Management. "This is because if it turns out there is a more substantial weakening of U.S. and global growth, then 25bps cut is less effective vs. if they cut 50bps the Fed gets extra insurance and then can opt not to cut more if economic activity were to pick up."

Powell began taking questions from the House Financial Services committee at 10 a.m. on Wednesday. 

During his testimony, Powell told Congress that the U.S. economy looks "solid" but that he sees risks from an apparent slowdown in the global economy and an inflation rate that has stayed stubbornly below the central bank's 2% target.

Powell has been the target of harsh criticism from President Donald Trump. Trump, who appointed Powell to the post, has maintained that interest rates are too high and blamed the Federal Reserve for stymieing U.S. economic growth and jobs creation. White House economic adviser Larry Kudlow told CNBC Tuesday that Powell's job was safe "at the present time." Powell said Wednesday he intends to serve his entire four-year term.

"While there's not much for us to truly sink our teeth into I think it's safe to say Powell has his dove hat on and a quarter cut is coming," said Mike Loewengart, vice present of investment strategy at E*Trade. "What's interesting though is how quickly Powell pointed abroad to support the case for a weakening economy. Because the reality is things are still pretty strong here at home -- last week's jobs numbers made that clear. This places increased importance on (Thursday's) CPI read: Powell needs a low inflation number to bolster the rate cut case. If it proves to be just like last week's employment read and also comes in strong, then perhaps we've all been overeager for a cut." 

In corporate news, shares of Levi Strauss (LEVI) fell 12% to $20.82 after the jeans maker posted fiscal second-quarter adjusted earnings ahead of forecasts but indicated sales likely would slow in the second half of the year. Levi Strauss is Real Money's Stock of the Day

Comcast ( CMCSA - Get Report) shares rose 1.9% to $43.79 after analysts at Goldman Sachs raised their rating on the stock and added the company to their "conviction buy" list. 
 
Electric carmaker Tesla ( TSLA - Get Report)  is prepping to boost electric-vehicle production at its Fremont, California facility, according to an internal memo, after achieving record deliveries in the second quarter. Shares were up 3.9% to $238.92.

T-Mobile US (TMUS - Get Report)  will replace Red Hat (RHT)  in the S&P 500, effective on July 15, following the closing Tuesday of International Business Machines' (IBM - Get Report) $34 billion acquisition of the software company. T-Mobile shares rose 4.6% to $78.63.

Shares of Amazon.com, Inc. AMZN closed above $2,000 for the first time ahead of this month's Prime Day sales event. Shares ended up $29.41, or 1.5%, at $2,017.41.

In energy news, global oil prices climbed as U.S. drillers began evacuating staff from rigs in the Gulf of Mexico amid concern that a tropical depression could pick up speed over the coming days and grow into a hurricane before landing on the Upper Texas Coast.

Brent crude contracts for September delivery, the global benchmark, were $2.59 higher from their Tuesday close and was changing hands at $66.75 per barrel, while West Texas Intermediate contracts for August, which are more tightly linked to U.S. gas prices, were up $2.50 at $60.33 per barrel.

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