Stocks surge as Fed hints at slower rate hikes

Star-Telegram - - Business - BY MAR­LEY JAY

U.S. stocks rock­eted to their big­gest gain in eight months Wed­nes­day af­ter Fed­eral Re­serve Chairman Jerome Pow­ell hinted that the Fed might not raise in­ter­est rates much fur­ther. The Dow Jones In­dus­trial Av­er­age surged 617 points.

In a speech to the Eco­nomic Club of New York, Pow­ell said that rates are close to “neu­tral,” the level at which they nei­ther hold back growth nor aid it. That might mean the Fed isn’t plan­ning to raise in­ter­est rates far above their cur­rent lev­els. Pow­ell also ap­peared to sug­gest that the Fed might pause its cy­cle of in­ter­est rate in­creases next year so the cen­tral bank can as­sess the ef­fects of its ac­tions.

That re­lieved in­vestors who feel the nine-year-old bull mar­ket could come to an end if rates rise too fast. Those wor­ries have con­trib­uted to the mar­ket’s big slump in Oc­to­ber and Novem­ber. The other ma­jor fac­tor is the trade dis­pute be­tween the U.S. and China. Pres­i­dents Don­ald Trump and Xi Jin­ping are sched­uled to dis­cuss their dif­fer­ences this weekend at a meet­ing of the Group of 20.

The S&P 500 in­dex surged 61.61 points, or 2.3 per­cent, to 2,743.78, its big­gest gain since March 26. The S&P 500 has gained 4.2 per­cent this week, but would still need to rise an­other 6.8 per­cent to re­turn to its record high from late Septem­ber.

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