US equities gain as Powell fuels hopes for rate cuts
WALL STREET’S three major indexes closed higher on Wednesday as economic data and comments from US Federal Reserve Chair Jerome Powell reinforced expectations that the US central bank would reduce its benchmark interest rate this year.
Mr. Powell said on Wednesday he expected the Fed to cut rates and that the US economy appeared nowhere near a recession, although he shied away from committing to a timetable for rate easing as progress on inflation was not assured.
In prepared remarks ahead of his congressional testimony, Mr. Powell said inflation had “eased substantially” since hitting 40-year highs in 2022, but that policy makers still needed “greater confidence” in its decline before rate cuts.
Along with Mr. Powell’s testimony, Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, said Wednesday’s economic data also boosted hopes for rate cuts and confidence in the labor market.
Data showed US private payrolls increased slightly less than expected in February.
And the Job Openings and Labor Turnover Survey showed job openings fell marginally in January, while hiring declined as labor market conditions continued to gradually ease.
February’s nonfarm payrolls report due on Friday is expected to offer further clarity on the state of the labor market.
The Dow Jones Industrial Average rose 75.86 points or 0.2%to 38,661.05. The S&P 500 gained 26.11 points or 0.51% at 5,104.76, and the Nasdaq Composite added 91.96 points or 0.58% at 16,031.54. Wall Street indexes had lost more than 1% on Tuesday with weakness in mega-cap stocks and as investors anxiously awaited Mr. Powell’s comments.
Nine of the 11 major S&P 500 industry sectors finished in the green on Wednesday, led by ratesensitive utilities, up almost 1%, and information technology, which rose 0.9%. Consumer discretionary was the biggest loser, down 0.4%.
Advancing issues outnumbered decliners by a 2.82-to-1 ratio on the NYSE where there were 493 new highs and 59 new lows.