Crucial Fed meeting has US stock investors on edge

By CNN Business

Updated 7:49 a.m. ET, July 29, 2021
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4:06 p.m. ET, July 28, 2021

Stocks finish mixed

From CNN Business' Anneken Tappe

US stocks finished mixed on Wednesday, with only the Nasdaq Composite eking out a gain.

The Dow ended 0.4%, or 128 points, lower, while the S&P 500 was flat. The Nasdaq, meanwhile, closed up 0.7%.

Investors were busy with the Federal Reserve’s monetary policy update Wednesday afternoon: The central bank left interest rates and asset purchases unchanged, but noted it had made progress since those policies were first instituted. While that was slightly more hawkish than expected, Fed Chairman Jerome Powell dampened the excitement during the subsequent press conference, saying there was no set timeline for tapering asset purchases and that plenty more improvement needed to happen first. 

3:28 p.m. ET, July 28, 2021

Powell defines what he means by 'transitory'

From CNN Business' Paul R. La Monica

Federal Reserve chairman Jerome Powell uses the term "transitory" a LOT to describe how he views current inflation trends. But what does Powell actually mean when he says this?

Powell said during the Fed's press conference Wednesday that it's important to note that "transitory" simply means it is not something that should last for several years. He also pointed out that businesses may choose to keep prices where they are after hiking them ... but that this isn't inflationary either.

"The concept of 'transitory' is that price increases will happen. We're not saying they will reverse, but the process of inflation will stop," Powell said, adding that what has happened in the past year is an example of "a price increase but not an inflation process."

Powell noted that not all prices will quickly come down — like lumber has recently. They may simply stop rising as dramatically.

"What I mean by 'transitory' is that it's something that doesn't leave a permanent mark," he added.

That may be of little comfort to consumers right now though.

3:30 p.m. ET, July 28, 2021

Fed still looking for 'further progress' towards full employment ahead of any policy changes

From CNN Business' Brendan O'Connor

Federal Reserve Chairman Jerome Powell pointed to the ongoing challenges in the labor market as a key factor in the central bank's decision to maintain its current fiscal policies aimed at aiding the recovery.

But unlike inflation, which the Fed targets at 2% annually, supporting labor stability is more nuanced. "With maximum employment, there isn't a single number that we can target," Powell said at a virtual press conference following his prepared remarks this afternoon. "We monitor a broad range of data about different aspects of the labor market."

Citing the number of job openings and improving unemployment numbers, Powell said that the economy is "clearly on a path to a strong labor market." However, he cautioned that "substantial further progress" is needed to ensure a full recovery.

3:30 p.m. ET, July 28, 2021

Powell: the Delta variant 'will have significant health consequences for many'

From CNN Business' Bridget O'Brian

The Delta variant of Covid-19 is driving rising cases across the country "and some forecasts are for them to rise quite significantly," Federal Reserve Chair Jerome Powell said in his comments after today's Fed meeting.

"What we’ve seen, though, is with successive waves of Covid, there has tended to be less in the way of economic implications from each wave," Powell added. It remains to be seen whether or not that will be the case with the Delta variant, he said, but it's "certainly plausible" that people might pull back from some activities such as dining out or traveling, and it's possible some schools may not reopen, Powell said.

The Fed Chairman acknowledged that there may be economic effects from such reductions in activity, especially as people decide when and how to return to their workplaces. "We don't have a strong sense of how that might work out, so we will just be monitoring it carefully," he said.

2:02 p.m. ET, July 28, 2021

Fed keeps interest rates and asset purchases unchanged

From CNN Business' Anneken Tappe

The Federal Reserve left interest rates and monetary policy unchanged on Wednesday, pointing at the incomplete economic recovery.

"The path of the economy continues to depend on the course of the virus," the central bank said in a statement, adding that while vaccinations are helping to limit the virus and its impact on the economy, the risk to the economic outlook still remains.

The Fed, which each month currently buys Treasury securities worth $80 billion and mortgage-backed securities worth $40 billion, noted that the economy had made a lot of progress since this policy has been put into place.

"The Committee will continue to assess [the] progress in coming meetings," according to the statement, hinting at the central bank getting ready to taper its asset purchases.

Meanwhile the Fed announced the establishment of two repurchasing, or repo, facilities, one for domestic markets and one for foreign and international central banks. The facilities will ensure the plumbing of the financial sector will function smoothly.

Fed Chairman Jerome Powell will hold a press conference at 2:30pm ET.

1:09 p.m. ET, July 28, 2021

Fed could use Delta variant as an excuse: strategist

From CNN Business' Anneken Tappe

It's a high pressure day what with the Federal Reserve statement only about an hour away. But guests of today's Markets Now show couldn't seem to agree on what to expect.

"I do think the Fed is going to use the Delta variant to take it easy," said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management, on the digital live show.

He contradicted earlier guest, Wharton Finance Professor Jeremy Siegel who is predicting the Fed will be more hawkish.

Schutte said the central bank might change its tune at its annual symposium at Jackson Hole next month, or perhaps even at its September meeting, but not right now.

The Fed's focus on unemployment -- which remains relatively high -- doesn't allow for big policy changes just yet, Schutte told CNN's Alison Kosik.

1:06 p.m. ET, July 28, 2021

Price increases at Mattel on inflationary pressures

From CNN Business' Anneken Tappe

Toy maker Mattel is seeing rampant growth, with sales up 40% in the second quarter. But that the company is also feeling the Covid effect on its supply chains

Pandemic pressures aren't lost on Mattel chairman and CEO Ynon Kreiz, who said prices will have to be increased.

"We do see inflationary pressure in freight costs... and materials," he said. That said, Kreiz added that "we feel great about our brand momentum."

For the full year, the company expects 12% to 14% revenue growth. It also raised its full-year EBITDA forecast by $75 million to between $875 million and $900 million.

Kreiz called the past quarter "exceptional" during CNN Business' digital live show Markets Now.

12:59 p.m. ET, July 28, 2021

'The Fed may be more hawkish' than expected today

From CNN Business' Anneken Tappe

We're just over an hour from the Federal Reserve's monetary policy update. Investors are anxiously awaiting what Jerome Powell & Co. might say about the renewed rise in Covid-19 infections.

But pandemic conditions won't necessarily mean a more dovish Fed, said Wharton Finance Professor Jeremy Siegel on the CNN Business digital live show Markets Now.

"Actually I think the Fed may be more hawkish than many people expect," he told CNN's Alison Kosik, pointing to inflation that's well above the central bank's expectations.

"I'm sure that... [Powell] got an earful from the bank president and the other board members that they're hearing from their districts that prices are rising," Siegel said.

That's why he expects the Fed statement to signal more active discussions regarding tapering.

"The Delta variant gives some support for those who want to stay the course, but I think the inflationary evidence is probably going to carry the day," he added.
12:13 p.m. ET, July 28, 2021

Stocks are mixed at midday

From CNN Business' Anneken Tappe

It's lunchtime, with just under two hours to go until the Federal Reserve's monetary policy update, and the stock market is trading mixed.

After all three indexes opened slightly higher, the Dow has given up its gains, falling 0.2% at midday.

The S&P 500 is up 0.1% and the Nasdaq Composite is up 0.7%.