Wall Street was whipped about by reports that US President Donald Trump was planning to dump Federal Reserve chair Jerome Powell, which were later hosed down by the administration.
Johnson & Johnson led the Dow Jones Industrial Average higher after the medical equipment maker’s earnings came in ahead of forecasts and it raised its earnings guidance.
The next round of major banks reported better-than-expected earnings, with Goldman Sachs rallying as trading revenue bolstered its bottom line while Morgan Stanley and Bank of America were on the red side of the ledger.
Nvidia was unfazed by ASML’s warning that tariffs posed a threat to the Dutch chip-equipment firm’s growth.
Not so fast
Stocks on Wall Street rallied after US President Donald Trump played down reports he planned to fire Fed chair Jerome Powell, telling reporters he’d discussed it with Republican lawmakers but was unlikely to send the central banker packing.
Initial reports of the president’s plans took the wind out of European markets, with the UK’s FTSE 100 down 0.1% and Germany’s DAX 30 falling 0.2%. The Dow Jones Industrial Average was up 0.4% in late trading.
“There was a bit of intraday volatility when government officials suggested President Trump had expressed support for the idea of firing Powell at a discussion with Republican lawmakers,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “The volatility around speculation of Fed chair Powell’s future saw whippy trading in the NZ dollar.”
The kiwi dollar traded at 59.40 US cents at 7am in Auckland from 59.50 cents yesterday.
US producer price figures came in softer than economists predicted, following an acceleration in consumer price inflation data on Tuesday which had seen analysts pare back their expectations for rate cuts by the Fed.
“The softer PPI data came as some relief to the market, seeing a reversal of yesterday’s upward move in rates, although mainly at the short end, with the Treasuries curve notably steeper,” BNZ’s Wong said.
We’re pleased to inform you
US President Trump said he’ll send letters out to 150 smaller trading partners setting their tariff rates.
Medical equipment firm J&J led Wall Street’s Dow higher, up 5.9% in late trading after second quarter earnings beat expectations and the company raised its annual guidance as it factored in a smaller impact from tariffs.
In contrast, Dutch chip-equipment maker ASML sank 11% after it warned the threat of creeping tariffs meant it couldn’t guarantee growth in the coming year. Chipmaker Nvidia shrugged off the news, gaining 0.1% in late trading.
Meanwhile, the next round of major US banks continued the theme of better-than-expected earnings, with Goldman Sachs gaining 0.6% as its profit was lifted by strong trading revenue in the second quarter. Morgan Stanley slipped 1.7% despite it increased earnings, while Bank of America dipped 0.4%. JPMorgan Chase and Wells Fargo reported increased earnings on Tuesday.
Bitcoin was up 2.7% at US$119,577 as crypto week continues, where US lawmakers debate legislation to create more crypto-friendly regulations. Some large US lenders including Bank of America and Citibank are working on launching stablecoins.
The reversal in Wall Street’s fortunes is poised to flow into the antipodes, with Australian futures pointing to a 0.6% increase for the S&P/ASX 200 index when it opens.
Local data today include the partial inflation reading for June from Statistics New Zealand, which will see economists firm up their forecasts for the June quarter consumers price index.
Reporting by Paul McBeth. Image from Larry Haubner on Unsplash.
This story has been updated to correct a repeat of Trump's name. The US President was reviewing Powell's future, not his own.
