Wall Street Ends Higher as Powell Testimony Wraps

The S&P 500 and the Nasdaq closed higher on Thursday as U.S. Federal Reserve Chairman Jerome Powell, in his second day of congressional testimony continued to beat a hawkish drum and suggested the central bank has not reached the end of its tightening cycle.

The tech-heavy Nasdaq's robust gain got a boost from momentum stocks led by Amazon.com and Apple Inc , while the S&P 500's advance was more tentative.

Industrials and financials dragged the blue-chip Dow to a lower close.

"Investors are playing tug of war, as if they're pulling petals from a daisy saying 'bull market, not a bull market,'" said Sam Stovall, chief investment strategist of CFRA Research in New York. "We don’t have much to trade on, second-quarter earnings don’t start in a couple weeks yet."

Powell, appearing before the Senate Banking Committee for his semi-annual monetary policy testimony reiterated his view that more interest rate hikes are likely in the months ahead, a sentiment echoed by Fed Governor Michelle Bowman earlier in the session.

"The market believes the Fed will raise rates one more time, not two more times as implied by the post FOMC meeting summary," Stovall added. "In addition, yesterday and today’s, Powell reiterated that they will be data dependent and Wall Street expects inflation to cool faster, and unemployment will start to creep higher which is what the Fed has intended with its rate increases."

Investors were taken by surprise when the Bank of England implemented a larger-than-expected 50 basis point rate hike to tackle Britain's stubborn inflation, further evidence that hot price growth remains a global economic headwind.

At last glance, financial markets have priced in a 77% probability of another 25 basis point rate hike at the conclusion of the Fed's July meeting, according to CME's FedWatch tool.

On the economic front, jobless claims held steady at a 20-month high and the Conference Board's Leading Economic index posted its 14th consecutive monthly decline, suggesting that the Fed's efforts to dampen the economy are beginning to have their intended effect.

According to preliminary data, the S&P 500 gained 16.15 points, or 0.37%, to end at 4,381.84 points, while the Nasdaq Composite gained 128.41 points, or 0.95%, to 13,630.61. The Dow Jones Industrial Average fell 3.16 points, or 0.01%, to 33,948.36.

Spirit AeroSystems tumbled after the aircraft parts supplier announced it would suspend production at its plant in Wichita, Kansas, after workers announced a strike from June 24.

Boeing shares dropped as well.

U.S.-listed shares of Accenture fell after the IT consulting firm forecast weaker-than-expected fourth-quarter revenue.

Darden Restaurants slid in the wake the Olive Garden parent's disappointing annual profit attributed to ballooning commodities prices.