— Stocks sank on Thursday as the yield on Treasuries rose after Federal Reserve Chair Jerome Powell said that while inflation was easing, the central bank is committed to getting inflation back to its 2% annual target rate.
Powell said the Fed is “proceeding carefully” on monetary policy decisions following a spike in Treasury yields that have helped tighten financial conditions “significantly,” though acknowledged that signs of ongoing economy growth could warrant further policy tightening.Â Â
Futures traders interpreted Powell’s remarks, in a speech at the Economic Club of New York, as meaning the Fed could hold off on more interest rate hikes at its next meeting in November and have less of an incentive to raise them in December.
The was close to 5% on Thursday, a level not seen since just before the financial crisis.
Investors have been taking some risk off the table in recent days in light of the outbreak of war in the Middle East and the uncertainty around oil prices and the conflict’s effects on markets. At the same time, corporate earnings continue to pour out this week, with companies such as Tesla (NASDAQ:) feeling the sting of price cuts while others such as Netflix (NASDAQ:) have scored surprise gains.
But the rising Treasury yields could be having the effect of doing the Fed’s work for it, as Fed officials have remarked in recent days.Â Powell said Thursday he was unwilling to declare whether longer-term Treasury yields could substitute for further rates hikes, saying it could in principle, but it “remains to be seen.”Â
Here are three things that could affect markets tomorrow:
1. American Express
Financial giant American Express Company (NYSE:) is expected to report earnings per share of $2.96 on revenue of $15.4 billion.
2. Regional bank earnings
Regions Financial Corporation (NYSE:) is expected to report earnings per share of 58 cents on revenue of $1.9 billion, while Comerica (NYSE:) is expected to report earnings per share of $1.69 on revenue of $878 million.
3. Interpublic reports
Advertising giant Interpublic Group of Companies Inc (NYSE:) is expected to report earnings per share of 73 cents on revenue of $2.4 billion.