Good afternoon investors! Today, investors fretted over the chip shortage as it lags on further. Meanwhile, eyes turned to the virtual Jackson Hole meeting, where Jerome Powell is expected to give a convincing speech as he bids for re-nomination. So, what did the stock market do today?
- The S&P 500 closed down 0.58%
- The Dow Jones Industrial Average closed down 0.54%
- The Nasdaq Composite closed down 0.64%
So what else did the stock market do today? Here are some of the top stories.
What Did the Stock Market Do Today? Chip Worries Somehow Got Worse.
The semiconductor industry continues to find more and more troubles, and consumers continue to be on the losing end of things. Supply chain issues are continuing to swamp the global economy, and chips are one of the most important components in tech manufacturing. They’re not something you want to be in short supply of. Now, one of the world’s largest manufacturers of chips is looking to make the shortage even costlier for consumers.
Taiwan Semiconductor (NYSE:TSM) is the world’s largest chip manufacturer, by far. The company accounts for a nearly 60% share of the world’s chips. And as the shortage of wafers spread worldwide early into the pandemic, TSM was one of the largest companies hit. Now, with the manufacturing of wafers picking back up, the company is being rocked by other issues in the supply chain; namely, it is having trouble accommodating revamping manufacturing.
The issues are now leading to a price increase on chips coming from the company. Taiwan Semiconductor will be increasing its prices by 20% before the end of the year. Of course, this means you’ll have to throw some extra money into that new car fund; these price gouges are surely going to translate to hefty price hikes at the consumer level.
The company says the increase will be helpful in two ways. First, it will decrease demand, so that only the most needing of companies will buy. Second, it will allow the company to invest in production expansion in order to restore production back to pre-pandemic levels as soon as possible. In the meantime, Taiwan’s biggest customers, like Apple (NASDAQ:AAPL), will have to suffer from the extra cost. In fact, Apple will likely be increasing the price tag on its upcoming iPhone model to accommodate the price hike.
Investors Turn Their Attention Toward Jackson Hole
Today is supposed to be an important day for the economy as a crowd of central banking figures and government officials swarm the town of Jackson Hole, Wyoming, to talk about the economy. The meeting typically takes place in the serene setting, but unfortunately, the delta variant concerns sweeping the nation have moved the conference online. Many are sweating in anticipation of the Fed’s update on tapering and other major concerns over the pandemic recovery effort.
There’s certainly one very bad sign for those who want the Fed to start tapering down its pandemic spending. The fact that this conference has been moved online says it all: We’re not out of the woods yet with Covid-19. The delta variant of the virus is extremely real, meaning the likelihood of further economic hardships is just as real. Dare the Fed taper its spending now and risk things getting worse before they get better?
That’s something we are all hoping to hear an answer on, and we will have to wait one more day. Fed Chairman Jerome Powell will be speaking at the conference on Friday; there is certainly an expectation that he will address the central bank’s big plans. As for a straight answer on the issue, people are less sure. There seems to be an agreement among analysts and investors alike that Powell will remain ambiguous on the plan.
Of course, the speech better be good, for Powell’s sake. The chairman’s position is up for grabs, and if he wants to get the nod for another term from President Joe Biden, he better deliver. Powell has the official stamp of approval from Treasury Secretary Janet Yellen, which surely helps. However, the progressive side of the political aisle is torn on whether or not Powell should be kept around.
What Else We’re Watching
- The Ford (NYSE:F) F-150 pickup truck, one of the most popular vehicles sold in America, is seeing its production cut due to chip shortages.
- Crypto-exchange giant Coinbase (NASDAQ:COIN) is hiring former Facebook (NASDAQ:FB) executive Kate Rouch as its chief marketing officer.
- The crisis in Afghanistan is growing even more intense today as an attack on Kabul airport caused a dozen U.S. service member casualties and injured many others.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.