Stocks closed mostly to the upside Wednesday after Federal Reserve Chairman Jerome Powell said in congressional testimony the central bank wasn't ready to pull back on its support since the U.S. economy has a ways to go before recovering.
Powell also reiterated - as he has many times before - that rising prices pressures will be temporary and will moderate through the end of the year.
“At our June meeting, the Committee discussed the economy’s progress toward our goals since we adopted our asset purchase guidance last December. While reaching the standard of ‘substantial further progress’ is still a ways off, participants expect that progress will continue,” Powell said Wednesday.
Powell said inflation “has increased notably and will likely remain elevated in coming months before moderating.” Consumer inflation in June jumped by the most in 13 years.
Investors also were assessing earnings reports from Bank of America (BAC) - Get Report, Citigroup (C) - Get Report and Wells Fargo (WFC) - Get Report, which was rising 2% after posting second-quarter earnings that beat analysts' forecasts.
The Dow Jones Industrial Average gained 44 points, or 0.13%, to close at 34,933, and the S&P 500 gained 0.12%. The Nasdaq declined 0.22%.
The S&P 500 set an all-time intraday high on Wednesday.
Consumers have been looking to spend as the economy makes its way out of the pandemic but their enthusiasm has been met with widespread supply shortages that have increased the costs of things such as used cars and clothing.
Fed Chairman Powell has insisted that the inflation hike will be temporary and prices will normalize once supply chain bottlenecks get resolved and the economy gets back on track.
"A key issue for investors is whether inflation proves to be transitory," said Greg Marcus, managing director at UBS Private Wealth Management. "Inflation pressures may have an impact on second-quarter earnings."
A report issued Wednesday indicated that prices paid to U.S. producers rose in June more than expected.
The yield on the benchmark 10-year Treasury retreated to 1.349% on Wednesday.
"The recent downward move in the 10-year Treasury yield was swift and decisive, but we believe this will likely prove to be a short-lived move," Marcus said. "In the face of rising consumer demand, COVID-19 vaccine rollouts and price increases in key commodity markets, a 2% yield on the 10-year Treasury bond will likely be justified by year-end."
Apple (AAPL) - Get Report gained 2.41% on Wednesday and closed at an all-time high following a Bloomberg report that said the tech giant has asked suppliers to build as many as 90 million next-generation iPhones this year, a 20% increase from its 2020 iPhone shipments.