Fed Tour After Trump-Powell: Stocks Surge Today
Headline: Market Updates and Federal Reserve Independence: A Week in Review
The past week has seen a flurry of economic news, with significant developments in the stock market and ongoing discussions about the independence of the Federal Reserve.
Federal Reserve: The Question of Independence Remains
President Trump cannot legally fire Federal Reserve Chair Jerome Powell without cause, and any attempt to do so threatens Federal Reserve independence. Despite repeated threats, no legally justified cause has been presented, and attempts to dismiss Powell have met strong resistance.
Central bank independence is a critical cornerstone of U.S. economic policy, ensuring stable inflation expectations, market confidence, and effective long-term monetary policy. Loss of this independence could lead to severe economic consequences, including higher interest rates and diminished effectiveness of monetary policy tools. Financial markets strongly trust Powell’s stewardship, and any perceived political interference raises concerns among investors and economists.
In the current climate, Trump continues public criticism of Fed leaders and calls for resignations of other Federal Reserve governors. However, the Fed remains institutionally independent with strong market support. Lawmakers, including Senator Elizabeth Warren, emphasize that firing independent Fed officials illegally will not reform the institution, urging Congress toward meaningful reform instead.
Stock Market Highlights
The Nasdaq Composite rose 0.2% to 21,108, setting a new weekly closing high. The Dow Jones Industrial Average followed suit, closing up 0.5% to 44,901, also reaching a new weekly closing high. The S&P 500 added 0.4% to 6,388, also making a new weekly closing high. Technology was among eight S&P 500 sectors that closed in the green on Friday.
Intel reported a loss of 10 cents per share on revenue of $12.9 billion for its second quarter, against a FactSet-compiled consensus of earnings of 1 cent per share on revenue of $11.97 billion. Intel forecast third-quarter revenue of $12.6 billion to $13.6 billion, lower than a consensus estimate of $12.66 billion.
Nvidia notched a new all-time intraday high, while UnitedHealth Group was among the top 10 of the 30 Dow Jones stocks.
Notable Moves
In the corporate world, there are talks of Berkshire Hathaway making a move for CSX via its BNSF Railway business. Union Pacific and Norfolk Southern are discussing a potential merger.
Vladimir Galkin, who made an investable fortune on GameStop and took a big position in JetBlue Airways, is buying NEGG stock. According to its website, Newegg is a leading global online retailer for PC hardware, consumer electronics, gaming peripherals, home appliances, automotive, and lifestyle technology.
Materials and industrial stocks led to gains, while energy and communication services stocks lagged.
In summary, while the President may threaten or criticize, the legal framework and market forces protect the Fed Chair’s tenure and the Federal Reserve’s independence for now. The stock market continues to show resilience, with significant gains in key sectors.
The Federal Reserve's independence, despite President Trump's criticisms, remains strong due to legal restraints and market support. In the stock market, the Nasdaq, Dow Jones, and S&P 500 all made new weekly closing highs, with technology being a major contributor. Notable moves included potential mergers among Union Pacific, Norfolk Southern, and Berkshire Hathaway's BNSF Railway business, as well as Vladimir Galkin's investment in NEGG stock. The market cap of various businesses continues to fluctuate based on factors like earnings reports, such as Intel's recent quarterly loss. These developments in finance, business, and technology underscore the ongoing relevance of decentralized finance (DeFi) and trading in the broader financial market.
