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Stocks End Mixed; Nasdaq at Record Close for Second Day

Stocks end mixed as Fed Chairman Powell says a spike in inflation likely is temporary, easing worry that the central bank could soon pull back on economic support.

The Nasdaq posted its second consecutive record close Wednesday in mixed trading as Federal Reserve Chairman Jerome Powell said a spike in inflation likely was temporary, easing worries that the central bank could soon pull back on economic support.

The Dow Jones Industrial Average finished down 71 points, or 0.21%, to 33,874, the S&P 500 slipped 0.11%, while the Nasdaq rose 0.13%.

The Nasdaq also set an intraday record Wednesday.

Economic data released Wednesday were mixed. The Markit Manufacturing Purchasing Managers Index for June was 62.6, topping economists' estimates of 61.5. New-home sales in May, meanwhile, declined unexpectedly.

Stocks closed higher Tuesday after Powell said prices have risen more than the Fed expected, but added he had a “a level of confidence” that prices eventually will come down as supply chain bottlenecks are resolved. 

The yield on the benchmark 10-year Treasury note rose early Wednesday to 1.49%.

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“A pretty substantial part, or perhaps all of the overshoot in inflation comes from categories that are directly affected by the reopening of the economy such as used cars and trucks,” Powell said Tuesday in response to a question before the House
Select Subcommittee on the Coronavirus Crisis.

“Those are things that we would look to stop going up and ultimately to start to decline,” he added.

Powell’s remarks followed a meeting of the Fed’s policymaking committee last week, when officials signaled they could boost interest rates and begin tapering asset purchases sooner than expected.

The Fed's hawkish tilt sent stock markets reeling last week but Wall Street has steadied after Powell's assurances the central bank wasn't close to raising rates.

“We believe the Fed’s new outlook will not translate into significantly higher policy rates any time soon," said a report from strategists at BlackRock Investment Institute.

Bitcoin prices rebounded Wednesday, rising 1.4% to $32,890 and taking the world's largest cryptocurrency above the critical $30,000 level that it breached on Tuesday.