Tech sector leads U.S. stocks higher as Fed signals rate cut

Stocks finished higher Wednesday as Wall Street welcomed new signals suggesting the Federal Reserve is ready to cut interest rates for the first time in a decade.

Technology stocks drove much of the gains, nudging the Nasdaq composite to an all-time high. The benchmark S&P 500 index briefly traded above 3,000 for the first time before pulling back to just below its most recent record high a week ago.

The market climbed early on after Fed Chairman Jerome Powell said that many Fed officials believe a weakening global economy and rising trade tensions have strengthened the case for a rate cut.

Powell’s remarks, which he delivered as part of his semi-annual monetary report to Congress, allayed investors’ concerns that an unexpectedly strong U.S. jobs report on Friday might give the Fed reason to stay put on interest rates.

The S&P 500 index rose 13.44 points, or 0.5%, to 2,993.07. The index, which set three record highs last week, is now less than 0.1% below its all-time high set last Wednesday.

The Dow Jones Industrial Average gained 76.71 points, or 0.3%, to 26,860.20.

The Nasdaq climbed 60.80 points, or 0.7%, to 8,202.53, a record. It’s previous record high was also set last Wednesday.

The Russell 2000 index of smaller company stocks rebounded from a brief slide, gaining 2.46 points, or 0.2%, to 1,565.05.

Major stock indexes in Europe closed mostly lower. The dollar fell and the price of gold rose.

The U.S. stock market rallied through much of June after the Fed first signaled that it might cut rates if necessary to shore up the U.S. economy.

Powell’s testimony before the House Financial Services Committee on Wednesday came at a time when the U.S. economic landscape is mixed. While the job market appears resilient and consumer spending and home sales look solid, the economy is likely slowing. And the U.S. trade disputes have added uncertainty to the economic outlook.

In his prepared statement, Powell said that since Fed officials met last month, “uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.” Meanwhile, inflation has fallen farther from the Fed’s target.

The Fed’s benchmark rate currently stands in a range of 2.25% to 2.5% after the central bank raised rates four times last year. Many investors have put the odds of a rate cut this month at 100%.

A quarter-point cut in interest rates, which many investors expect, isn’t likely to have a big impact on consumers’ credit cards or mortgage rates. But it would reassure markets that the Fed would be open to further rate cuts if more signs of weakness in the global economy emerge, Warne said.

Powell is due to appear before the Senate Banking Committee on Thursday.

Investors will have to wait until the end of the month to see what action the Fed takes on interest rates at its next meeting of policymakers. Before then, however, the market will turn its attention to the upcoming company earnings reporting season, which begins next week.

This could be the first time in three years that S&P 500 companies report a back-to-back decline in overall earnings.

Energy stocks also rose as the price of U.S. crude oil climbed 4.5%. Chevron rose 1.7%.

Benchmark crude oil rose $2.60 to settle at $60.43 a barrel, the highest level since late May. Brent crude oil, the international standard, gained $2.85 to close at $67.01 a barrel. Wholesale gasoline added 8 cents to $2.01 per gallon. Heating oil climbed 8 cents to $1.99 per gallon. Natural gas picked up 1 cent to $2.44 per 1,000 cubic feet.