Apple growth
Investors see Fed chair statement as positive sign, push stocks higher
Shares in Apple and other technology companies rose Tuesday after the Federal Reserve signaled a possible rate cut amid escalating trade conflicts. The Dow rose 512 points.
The Dow Jones Industrial Average jumped more than 500 points Tuesday as investors welcomed signs that the Federal Reserve may cut interest rates to help buttress U.S. economic growth in the face of escalating trade wars.
Optimism about a resolution to one of those trade disputes and a rebound in technology shares also boosted the market. The benchmark S&P 500 index notched its best day since early January.
Federal Reserve Chairman Jerome Powell spurred the rally when he said the central bank was “closely monitoring” trade developments and would “act as appropriate” to sustain the U.S. economic expansion. Investors read his remarks as a signal that the Fed will likely cut interest rates later this year.
Investors have been worried the expanding conf licts between the U.S. and some of its biggest trading partners could slow U.S. economic growth and stymie corporate profits. They’ve been dumping stocks for the past month and f leeing to safer holdings such as bonds.
“The concern in the market is that economic data is going to worsen,” said Jeff Zipper, managing director at U.S. Bank Wealth Management. “If economic data worsens, then growth slows down. So obviously a rate cut would provide liquidity into the economy and the marketplace, and that’s what investors are looking at right now.”
The Nasdaq composite rode the rally in technology stocks to a gain of 194.10 points, or 2.7 percent, to 7,527.12. The index recouped the losses it racked up a day earlier, when tech stocks slumped over concerns that several big internet companies could face more scrutiny from antitrust regulators.
The S&P 500 index gained 58.82 points, or 2.1 percent, to 2,803.27, its best performance since Jan. 4. The Dow vaulted 512.40 points, or 2.1 percent, to 25,332.18.
The Russell 2000 index of small companies picked up 38.58 points, or 2.6 percent, to 1,508.56.
Major stock indexes in Europe also closed broadly higher.
Speaking at a Fed conference in Chicago, Powell said: “We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion.”
Powell didn’t explicitly say what the Fed would do. But his remarks fueled expectations that the central bank will cut rates at least once and possibly two or more times before year’s end, in part because of the consequences of the trade war.
Automakers rallied as traders bet that the U.S. and Mexico will work out their trade issues. Many automakers import vehicles from Mexico and would be hit particularly hard if the U.S. imposes tariffs. Ford Motor climbed 3.2 percent, General Motors gained 6 percent and Fiat Chrysler added 4 percent.
Chipmakers were among the biggest gainers in the technology sector. Nvidia jumped 6.9 percent and Advanced Micro Devices climbed 7.2 percent. Other technology companies rallied. Microsoft rose 2.8 percent and Apple added 3.7 percent.