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U.S. stock-index futures traded mixed early Wednesday as investors awaited testimony from Federal Reserve Chairman Jerome Powell and weighed another batch of quarterly results from the nation’s largest financial institutions.

Another measure of inflation, the producer-price index, also was in focus after a Labor Department report showed that consumer prices for June posted the biggest surge since 2008.

How are stock benchmarks trading?

On Tuesday, the Dow DJIA, -0.31% fell 107.39 points, or 0.3%, to end at 34,888.79; the S&P 500 index SPX, -0.35% declined 15.42 points, or 0.4%, to close at 4,369.21, and the Nasdaq Composite COMP, -0.38% fell 55.59 points, or 0.4%, finishing at 14,677.65. The small-capitalization Russell 2000 index RUT, -1.88% dropped 1.9%.

What’s driving the market?

Worries about monetary policy and inflation are back in focus on Wednesday after the June CPI came in hotter than expected, confirming that inflation is on the rise as the economy attempts to bounce back from the COVID pandemic.

Rising pricing pressures will be in focus when Fed Chairman Powell testifies to the to the House Financial Services Committee at around noon Eastern. The central bank chief is to provide testimony to Congress as a part of his semiannual update to lawmakers about the state of the economy, followed by testimony to the Senate Thursday.

“Needless to say, the markets will be watching closely to see if the latest CPI print has adjusted the Fed’s thinking regarding elevated inflation being transitory,” wrote Sophie Griffiths, market analyst at Oanda, in a daily note.

“Any hint that the Fed’s position is wavering could see stocks take another leg lower,” the analyst added.

On Tuesday, government data showed that the rate of inflation in the 12 months ended in June climbed to 5.4% from 5%. The last time prices rose that fast was in 2008, when oil hit a record $150 a barrel.

“Patience will remain the watchword,”said Ian Shepherdson, chief economist at Pantheon Macroeconomics, of the Powell’s comments.

See: Powell will stress patience in Capitol Hill testimony this week

So far, Fed members haven’t been flustered by the jump in inflation, describing it as likely short-lived.

Investors will also be looking for any mention of timing on raising policy interest rates currently in a range between 0% and 0.25%, and plans for tapering the Fed’s asset-purchase program that is currently running at $120 billion a month.

On Tuesday San Francisco Fed President Mary Daly characterized the CPI print as just part of a temporary “pop” in inflation that won’t last, and the central bank should remain “steady in the boat” with its easy policy stance.

A final PPI reading for June is due at 8:30 a.m. ET with economists expecting a 0.6% increase month over month, according to Dow Jones. A report on inflation from the Atlanta Fed, the inflation business expectations, are due at 10 a.m.

Corporate earnings were in focus on Wednesday too with BlackRock BLK, -0.86% and Bank of America BAC, -1.90% reporting revenue and profit that were better than forecast.

Meanwhile, Senate Democrats announced late Tuesday said that they’d reached a budget agreement envisioning spending a $3.5 trillion over the coming decade, paving the way for their drive to pour federal resources into climate change, healthcare, and family-service programs sought by President Joe Biden.

Separately Tuesday, a bipartisan group of senators continued working on a third measure that would spend around $1 trillion on roads, water systems and other infrastructure projects, another Biden priority.

Which companies are in focus?
  • Shares of Bank of America Corp. dropped in premarket trading Wednesday, after the moneycenter bank reported a second-quarter profit that rose above expectations but revenue fell short, weighed by misses in the consumer banking and global markets businesses.
  • BlackRock reported Wednesday second-quarter profit and revenue that rose above expectations, as assets under management increased 30% and net inflows topped $80 billion. 
  • Eli Lilly & Co. LLY said Wednesday it is acquiring the shares of Protomer Technologies it doesn’t already own, in a deal it says has a potential value of more than $1 billion based on future development and commercial milestones.
  • Verso CorpVRS, a specialty and packaging paper and pulp company, on Wednesday confirmed that it has received an unsolicited bid from Atlas Holdings LLC to take over the company for $20 a share in cash.
  • Sight Sciences IncSGHT, is now set to go public at a valuation of more than $1 billion, after the expected pricing and number of shares to be offered in the California-based Ophthalmology and optometry company’s initial public offering were increased.