Last week's monthly jobs report demonstrated the ongoing strength of the U.S. economy and underscored the need for the Federal Reserve to rein in its stimulus efforts, a Fed official said Tuesday.
St. Louis Federal Reserve Bank President James Bullard said that Friday's report, which showed a healthy gain of 943,000 jobs last month, means the economy is making sufficient progress to start reducing, or tapering, the Fed's $120 billion in monthly bond purchases. Those purchases are intended to lower longer-term interest rates and bolster the economy.
Bullard's comments echo other recent calls from inside and outside the Fed that the central bank should start dialing back its ultra-low interest rate policies. On Monday, Boston Federal Reserve Bank President Eric Rosengren said the tapering should begin his fall. And last week, Fed Governor Richard Clarida said the economy would likely meet the Fed's criteria for lifting interest rates by the end of 2022, an earlier timetable than the Fed's policymaking committee has projected.
Bullard sketched an aggressive timeline for tapering, which he thinks should start soon and concluded as early as next spring. That would put the Fed in a position to potentially lift its short-term interest rate from nearly zero if necessary, to keep inflation from worsening.
Nasdaq wavers but others on Wall Street gain
Stocks capped another wobbly day of trading on Wall Street with modest gains Tuesday, as financial and industrial companies helped lift the market, outweighing a pullback in technology stocks.
The S&P 500 recovered from an early slip and eked out a 0.1% gain, enough to eclipse the record high it set Friday.
The majority of companies in the benchmark index made gains, but they were kept in check by technology companies, which have an outsized weight on the S&P 500.
Banks made some of the strongest gains as bond yields edged higher. Banks benefit from higher yields, which allow them to charge higher interest rates on loans. The yield on the 10-year Treasury rose to 1.35% from 1.31% late Monday.
Oil prices pulled up after sliding most of the last week and into Monday. U.S. benchmark crude oil rose 2.7% and helped lift the S&P 500's energy sector to 1.7% gain. Exxon Mobil rose 1.7% and Chevron gained 1.8%.
The broader market remains choppy with investors in the midst of a relatively quiet week. The latest round of corporate earnings is nearly finished and there are only a few pieces of economic data expected.
The S&P 500 gained 4.40 points to 4,436.75. The Dow Jones Industrial Average rose 162.82 points, or 0.5%, to 35,264.67. The blue-chip index also notched an all-time high.
The slide in technology stocks weighed on the tech-heavy Nasdaq, which lost 72.09 points, or 0.5%, to 14,788.09. Small company stocks rose. The Russell 2000 index gained 4.55 points, or 0.2%, to 2,239.36.
Wall Street is still trying to gauge the pace of economic growth amid new worries about the latest wave of COVID-19 from the more contagious delta variant.
Parts of Japan, including Tokyo, the capital, remain under a state of emergency as surging numbers of infections put more COVID-19 patients in already overburdened hospitals.
Earnings season is wrapping up with several big names. Sysco surged 6.5% after the food distributor reported quarterly results that topped Wall Street's estimates.
Ebay will report its results on Wednesday and Walt Disney will report results on Thursday.