Stocks drifted higher this morning as investors awaited Fed
Chairman Ben Bernanke’s congressional testimony. Bernanke is set to testify this morning
before the Senate Banking committee on the current condition of the economy and
as has been the pattern of 2012, the markets are up in hopes that Bernanke
signals new Fed stimulus action.
Economic reports out this morning from the Labor Department showed that
the Consumer Price Index (CPI) was unchanged for July signaling prices
flattened and the risk of inflation is not a near-term threat. Core CPI, which strips out the volatility of
food and energy prices rose 0.2%, in line with economists expectations. Falling energy prices pulled down prices and
as we’ve been saying will ultimately serve as a tax break, putting dollars back
in the pocket of consumers. Another
report this morning showed industrial production in June increased more than
expected, mostly led by automobiles and machinery makers. Capacity Utilization, which measures what
portion of a manufacturing plant is producing, rose from 78.7 to 78.9 in
June. The average reading since 1967 has
been 80.7. The surprise increase in
manufacturing comes after a decline in May.
News out of Europe was quiet this morning and overshadowed by markets
anticipating Bernanke’s testimony this morning.
The main economic report was out of Germany with the ZEW index of German
investor confidence falling in July. Oil
prices continued their climb back up and gold fell slightly. The US dollar was mostly down and the 10 yr.
treasury yield remained at 1.49%.
Volatility was down to start trading and then began to increase as
Bernanke’s testimony began. It looks to
be a volatile morning as investors trade on the comments of the Fed chairman.
