Stock indexes yo-yo, Fed chairman Powell addresses Congress, and Americans have boosted retirement savings during the pandemic. Here's how the headlines could affect your money.
Stock indexes did something of a 180 on Tuesday. After dipping on fears of impending inflation, indexes bounced back following favorable comments from Federal Reserve Chairman Jerome Powell. The Dow Jones Industrial Average managed a 0.1% gain, as did the S&P 500. The tech-heavy Nasdaq Composite ended the day down only 0.5%, though it had shed as much as 3.9% earlier.
Some prominent tech stocks followed a more extreme version of the same pattern. Tesla finished the day down 2.2% after surrendering as much as 13%, while Apple lost only 0.1% after being down by 6%.
Video by Helen Zhao
Powell told the Senate Banking Committee on Tuesday that Fed policies favoring economic growth – such as ultralow interest rates – would continue. "The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved," he said.
The pandemic "has also left a significant imprint on inflation," he added, and signaled that it isn't currently a major threat to the economy.
Although many Americans have struggled with Covid-related job losses or reductions in hours or pay, employed workers were largely able to maintain or up their retirement contributions, according to data from Fidelity.
Savings rates in workplace retirement accounts among Fidelity customers reached record levels in the fourth quarter of 2020: Savers stashed away 9.1% of their pay in 401(k) plans and 7.3% in 403(b)s. If you haven't begun saving in a workplace retirement account, experts recommend you contribute at least enough to get any match your employer offers.
Video by Ian Wolsten
Investors worry that the flow of stimulus money into the economy will trigger demand-pull inflation, meaning consumer demand could grow faster than the supply of goods and services, causing prices to increase.
More from Grow:
- Investors watch as Fed Chair talks monetary policy with Congress this week: How the headlines can affect your money
- Americans boosted their retirement savings during Covid: Here’s how much money they put away
- Are stocks in a bubble? Why experts say you don’t need to worry about signs of ‘irrational exuberance’ in the market