U.S. stocks edged higher Wednesday as investors awaited more testimony from Federal Reserve Chairman Jerome Powell and economic data on the pace of recovery.
The S&P 500 index, Nasdaq Composite and the blue-chip Dow Jones Industrial Average ticked up 0.4% in early trading. Technology stocks recovered some ground after edging lower on Tuesday.
Markets have seesawed this week as investors mulled signs that the global economic recovery may take longer than anticipated because of rising Covid-19 cases and extended lockdowns in many countries. Money managers are also assessing the rich valuations on stocks after the major indexes climbed over 70% since the pandemic-fuelled rout last March.
“We are now one year into this rally: we’ve seen a massive decline and a massive rally, and my sense is that markets are just going to pause for breath from here,” said Brian O’Reilly, head of market strategy for Mediolanum International Funds. “Gains are going to be much harder to come by for the rest of the year.”
Despite Mr. Powell’s comments that the Fed will continue to support the economy until the recovery is more robust, money managers are also betting that inflation will climb sharply, and could spur the central bank to raise interest rates or pare back bond purchases.
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