Home Business Stocks decline, Powell underscores economic risks – Yahoo Finance

Stocks decline, Powell underscores economic risks – Yahoo Finance

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U.S. stocks slipped and safe haven assets rose as investors digested commentary from Federal Reserve Chair Jerome Powell Tuesday afternoon.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The S&amp;P 500 (^GSPC) edged down 0.61%, or 17.92 points, as of 1:19 p.m. ET. The Dow (^DJI) fell 0.37%, or 99.51 points, while the Nasdaq (^IXIC) fell 1.05%, or 85.03 points.” data-reactid=”16″>The S&P 500 (^GSPC) edged down 0.61%, or 17.92 points, as of 1:19 p.m. ET. The Dow (^DJI) fell 0.37%, or 99.51 points, while the Nasdaq (^IXIC) fell 1.05%, or 85.03 points.

Five Fed speakers were on the docket to give public remarks Tuesday, with Fed Chair Jerome Powell’s speech on the economic outlook and monetary policy in New York at 1 p.m. a focal point for investors.

In his commentary, Powell emphasized that he and his colleagues were closely monitoring the economic outlook to determine the best course of action for future monetary policy, and reiterated that the Fed would “act as appropriate to sustain the expansion.” He noted the increase to risks since the start of the year, including the threat of further tariffs and data on slowing global growth.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“Against the backdrop of heightened uncertainties, the baseline outlook of my FOMC colleagues, like that of many other forecasters, remains favorable, with unemployment remaining near historic lows,” Powell&nbsp;said in prepared remarks. “Inflation is expected to return to 2 percent over time, but at a somewhat slower pace than we foresaw earlier in the year. However, the risks to this favorable baseline outlook appear to have grown.”” data-reactid=”19″>“Against the backdrop of heightened uncertainties, the baseline outlook of my FOMC colleagues, like that of many other forecasters, remains favorable, with unemployment remaining near historic lows,” Powell said in prepared remarks. “Inflation is expected to return to 2 percent over time, but at a somewhat slower pace than we foresaw earlier in the year. However, the risks to this favorable baseline outlook appear to have grown.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="This speech comes after President Donald Trump on Monday&nbsp;renewed his attacks&nbsp;on Fed officials, likening them to&nbsp;“a stubborn child”&nbsp;for holding rates steady after last week’s meeting. He suggested that the Fed needed to cut rates “to make up for what other countries are doing against us,” after global central banks loosened their own monetary policy throughout June.” data-reactid=”20″>This speech comes after President Donald Trump on Monday renewed his attacks on Fed officials, likening them to “a stubborn child” for holding rates steady after last week’s meeting. He suggested that the Fed needed to cut rates “to make up for what other countries are doing against us,” after global central banks loosened their own monetary policy throughout June.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Powell on Tuesday&nbsp;underscored the independence&nbsp;of the central bank from political sway in guiding monetary policy.” data-reactid=”21″>Powell on Tuesday underscored the independence of the central bank from political sway in guiding monetary policy.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Markets priced in a 100% probability of a rate cut after the Fed’s July meeting as of Tuesday afternoon, according to&nbsp;CME Group’s FedWatch tool.&nbsp;This comprised a 67.7% probability of a 25 basis point cut, and a 32.3% probability of a 50 basis point cut.” data-reactid=”22″>Markets priced in a 100% probability of a rate cut after the Fed’s July meeting as of Tuesday afternoon, according to CME Group’s FedWatch tool. This comprised a 67.7% probability of a 25 basis point cut, and a 32.3% probability of a 50 basis point cut.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Long-term Treasuries were bid up amid the expectations for a near-term cut to interest rates, with the yield on the 10-year Treasury note holding just above 2% Tuesday afternoon. Other safe haven assets also rose, with the Japanese yen (JPYUSD=X) climbing to its strongest level against the U.S. dollar since January. Gold prices (GC=F) hovered near six-year highs.” data-reactid=”23″>Long-term Treasuries were bid up amid the expectations for a near-term cut to interest rates, with the yield on the 10-year Treasury note holding just above 2% Tuesday afternoon. Other safe haven assets also rose, with the Japanese yen (JPYUSD=X) climbing to its strongest level against the U.S. dollar since January. Gold prices (GC=F) hovered near six-year highs.

Federal Reserve Chairman Jerome Powell speaks on a television as traders work on the floor of the New York Stock Exchange in New York, U.S. REUTERS/Lucas Jackson

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Crude oil prices (CL=F,&nbsp;BZ=F)&nbsp;edged higher after Trump on Monday&nbsp;imposed sanctions&nbsp;on Iran’s supreme leader, Ayatollah Ali Khamenei and several other military commanders, escalating tensions with one of the world’s largest crude exporters.” data-reactid=”35″>Crude oil prices (CL=FBZ=F) edged higher after Trump on Monday imposed sanctions on Iran’s supreme leader, Ayatollah Ali Khamenei and several other military commanders, escalating tensions with one of the world’s largest crude exporters.

Market participants are awaiting results from the next meeting of the Organization of the Petroleum Exporting Countries and associated oil producers, which is set to take place July 1-2 in Vienna, Austria. According to CME Group, markets priced in a more than 68% probability of further output cuts amid signals of a slowing global economy and dampened demand for oil.

STOCKS

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="AbbVie (ABBV) announced it will acquire botox-maker Allergan (AGN) in a cash-and-stock deal with an equity value of about $63 billion,&nbsp;according to a statement.&nbsp;The&nbsp;transaction&nbsp;marks the second largest in the pharmaceutical space this year, after Bristol-Myers Squibb’s $74 billion proposed acquisition of Celgene. Abbvie will pay Allergan shareholders a total of $188.24 per share, representing a 45% premium above Allergan’s closing price Monday. Abbvie said it is expecting the deal will result in at least $2 billion in annual pretax synergies and cost reductions by year three of the acquisition.” data-reactid=”38″>AbbVie (ABBV) announced it will acquire botox-maker Allergan (AGN) in a cash-and-stock deal with an equity value of about $63 billion, according to a statement. The transaction marks the second largest in the pharmaceutical space this year, after Bristol-Myers Squibb’s $74 billion proposed acquisition of Celgene. Abbvie will pay Allergan shareholders a total of $188.24 per share, representing a 45% premium above Allergan’s closing price Monday. Abbvie said it is expecting the deal will result in at least $2 billion in annual pretax synergies and cost reductions by year three of the acquisition.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Homebuilder Lennar (LEN) topped consensus expectations in fiscal second-quarter results, citing a recovering housing market as cause for the outperformance. The company delivered adjusted earnings of $1.30 per share on revenue of $5.56 billion, versus consensus estimates for $1.14 per share on sales of $5.1 billion. The company said lower rates, combined with its own incentives, have helped keep the company on track to deliver more than 50,000 homes in 2019.” data-reactid=”43″>Homebuilder Lennar (LEN) topped consensus expectations in fiscal second-quarter results, citing a recovering housing market as cause for the outperformance. The company delivered adjusted earnings of $1.30 per share on revenue of $5.56 billion, versus consensus estimates for $1.14 per share on sales of $5.1 billion. The company said lower rates, combined with its own incentives, have helped keep the company on track to deliver more than 50,000 homes in 2019.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“The well-documented market pause in the second half of 2018 set the stage for more moderate home price increases and lower interest rates which stimulated both affordability and demand, leading homebuyers back to the market,” Lennar executive chairman Stuart Miller&nbsp;said in a statement.” data-reactid=”44″>“The well-documented market pause in the second half of 2018 set the stage for more moderate home price increases and lower interest rates which stimulated both affordability and demand, leading homebuyers back to the market,” Lennar executive chairman Stuart Miller said in a statement.

ECONOMY

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Consumer confidence dropped to the lowest level since September 2017 in June, according to the&nbsp;Conference Board’s monthly index. The headline Consumer Confidence index fell to 121.5 in June, dropping from a downwardly revised reading of 131.3 in May and snapping three consecutive months of improvements. Indices tracking consumers’ assessments of current and future business conditions also sharply declined in June, amid “an escalation in trade and tariff tensions” earlier this month, the Conference Board said.” data-reactid=”46″>Consumer confidence dropped to the lowest level since September 2017 in June, according to the Conference Board’s monthly index. The headline Consumer Confidence index fell to 121.5 in June, dropping from a downwardly revised reading of 131.3 in May and snapping three consecutive months of improvements. Indices tracking consumers’ assessments of current and future business conditions also sharply declined in June, amid “an escalation in trade and tariff tensions” earlier this month, the Conference Board said.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The pace of home price increases decelerated for a 13th consecutive month in April, according to Standard and Poor’s. The&nbsp;S&amp;P CoreLogic Case-Shiller&nbsp;home price index registered a 3.5% annual increase in April, down from 3.7% in March but about in-line with consensus expectations, according to Bloomberg data. The 20-City Composite posted a 2.5% year-over-year gain, down from 2.6% in the month prior and marking the slowest pace since August 2012.” data-reactid=”47″>The pace of home price increases decelerated for a 13th consecutive month in April, according to Standard and Poor’s. The S&P CoreLogic Case-Shiller home price index registered a 3.5% annual increase in April, down from 3.7% in March but about in-line with consensus expectations, according to Bloomberg data. The 20-City Composite posted a 2.5% year-over-year gain, down from 2.6% in the month prior and marking the slowest pace since August 2012.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Separately, new-home sales unexpectedly declined in May to a seasonally adjusted annual rate of 626,000, according to the&nbsp;U.S. Census Bureau. This was 7.8% below April’s upwardly revised rate of 679,000, and 8.5% below consensus expectations for June’s reading, according to Bloomberg-compiled estimates.” data-reactid=”48″>Separately, new-home sales unexpectedly declined in May to a seasonally adjusted annual rate of 626,000, according to the U.S. Census Bureau. This was 7.8% below April’s upwardly revised rate of 679,000, and 8.5% below consensus expectations for June’s reading, according to Bloomberg-compiled estimates.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck” data-reactid=”50″>Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Read more from Emily:” data-reactid=”51″>Read more from Emily:

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and reddit.” data-reactid=”59″>Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and reddit.

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