Investors Await Bank Earnings, Powell Stresses Fighting Inflation May Require Unpopular Steps

Barry Adams
10 Jan, 2023
New York City

Stocks lacked direction after one hour of trading and investors reacted to corporate news and digested the latest comments from Fed chairman. 

Chairman Powell stressed the need for the central bank's independence from political interference at the Symposium on Central Bank Independence, Sveriges Riksbank, Stockholm, Sweden.

"The case for monetary policy independence lies in the benefits of insulating monetary policy decisions from short-term political considerations," Powell added. 

The Federal Reserve's mandate is to maintain price stability and generate maximum employment but that also requires making decisions that are not always popular. 

"But restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy.

The absence of direct political control over our decisions allows us to take these necessary measures without considering short-term political factors," Powell said at the gathering in Sweden. 

The Federal Reserve is planning to conduct additional stress tests in evaluating financial readiness of banks in the event of a major hurricane or climate disaster but will refrain from pursuing climate goals and imposing them on banks.

 

U.S. Indexes In Review 

Stocks meandered in early trading after two days of upward trajectory as investors weigh economic slowdown against higher rates in the months to come.

The S&P 500 index increased 0.3% to 3,903.33 and the Nasdaq Composite index added 0.4% to 10,673.68.

Crude oil futures contract increased 51 cents to $75.18 a barrel and natural gas futures contract fell 25 cents to $3.65 a thermal unit.

Bond yields were fairly stable as investors shifted focus to the upcoming corporate earnings and movements in energy markets after China opened its borders and social mobility and gathering restrictions. 

The yield on 2-year Treasury notes increased to 4.25%, 10-year Treasury notes hovered near 3.579% and 30-year Treasury bonds traded near 3.71%. 

 

U.S. Stock Movers 

Coinbase Global Inc increased 4.0% to $39.79 after the cryptocurrency exchange said it plans to lay off additional 950 staff according to a blog post. 

Coinbase said the new layoffs are expected to cost between $149 million and $163 million in the first quarter, according to a regulatory filing. 

The cryptocurrency exchange laid off about 1,000 employees in June 2020. 

Coinbase listed its stock through a direct listing on the Nasdaq on April 14, 2021 at a price of $250and closed at $328.55 valuing the company at close to $86 billion. 

Bed Bath & Beyond Inc soared 30% to $2.12 after the struggling retailer reported wider-than-expected loss. 

Revenue in the fiscal third quarter ending on November 26 declined 33% to $1.26 billion and comparable store sales declined 34% from  a year ago. 

Net loss in the quarter jumped to $392.6 million from $276.4 million or diluted loss per share rose to $4.33 from $2.78 a year ago. 

Sotera Health Company soared 93% to $16.63 after the company said it agreed to settle more than 870 cases pending in two court cases in Illinois related to the release of carcinogen ethylene oxide 

Under the agreements, the company and its subsidiary Sterigenics will pay $408 million to settle the claims. 

 

Merger Update 

Frontline Ltd increased 21.6% to $13.83 after the oil tanker shipping company said it terminated its merger talks with Euronav NV. 

Euronav dropped 17.1% to $13.22. 

 

European Markets 

European markets traded lower from the recent 7-month highs and investors weighed the possibilities of a soft-landing scenario in the event of continual decline in inflation driven by the fall in energy prices. 

The DAX index fell 0.1% to 14,770.03, the CAC-40 index declined 0.5% to 6,869.15 and the FTSE 100 index decreased 0.4% to 7,694.90. 

The yield on 10-year German Bunds rose to 2.284%,French bonds increased to 2.788%, UK Gilts to 3.58% and Italian bonds to 4.20%. 

Brent crude oil futures contract for immediate month delivery increased 28 cents to $79.95 a barrel and the Dutch TTF natural gas fell 7.9% to