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NEW YORK (AP) – US stocks rose a record eight months on Wednesday after Federal Reserve Chairman Jerome Powell hinted that the Fed could not raise its interest rates further. . The Dow Jones Industrial Average jumped 617 points.
In a speech to the New York Economic Club, Powell said that interest rates were close to "neutrality", a level at which they are not holding back growth, nor can they be seen as "neutral". helps with growth. This could mean that the Fed is not planning to raise interest rates well above their current levels. Powell also seemed to suggest that the Fed could suspend its rate hike cycle next year so that the central bank can badess the effects of its actions.
This relieved investors who felt the nine-year bull market could disappear if rates rise too quickly. These concerns contributed to the sharp drop in the market in October and November. The other important factor is the trade dispute between the United States and China. Presidents Donald Trump and Xi Jinping are expected to discuss their differences this weekend at a meeting of the Group of 20.
Wall Street has become pessimistic about the fact that nations will resolve their differences as soon as possible. Whether they progress or not, the actions could have a strong reaction to the Trump-Xi meeting.
Shares rose during the morning trading session and almost tripled their earnings when Powell spoke. Bond yields fell and the dollar weakened, as investors adjusted their expectations based on how quickly interest rates could rise in the future.
After reducing interest rates to zero in 2008 during the financial crisis, the Fed has been raising them regularly since the end of 2015 and is expected to announce a further rise in December. However, higher interest rates tend to dampen economic growth and, as growth in the United States and other regions is already expected to slow down next year, investors are worried that increases will dampen the economy.
"He recognizes that if you change interest rates today, you will not feel the effects before 12 to 18 months," said Jack Ablin, chief investment officer of Cresset Wealth Advisors. "Tightening central bank rates around the world was probably the biggest risk for equity investors over the next four quarters, so it's encouraging to see the Fed Chairman say he's almost done."
The S & P 500 index jumped 61.62 points, or 2.3%, to 2,743.79, its biggest gain since March 26. The S & P 500 gained 4.2% this week, but it should still increase 6.8% to return to its record in late September. .
The Dow Jones Industrial Average index jumped 617.70 points, or 2.5%, to 25,366.43. The Nasdaq composite rose 208.89 points, or 2.9%, to 7,291.59. The Russell 2000 stock index of small companies gained 37.53 points, or 2.5%, at 1,530.38.
After an initial decline, bond prices rose, leading to lower yields. The yield on the 10-year Treasury note fell to 3.06% from 3.07% earlier in the day. It stood at 3.05% Tuesday night. The 2-year note yield stabilized at 2.81%.
The dollar has weakened, pushing up metals prices. The ICE index in US dollars lost 0.6%.
Salesforce customer software developer grew 10.3% to $ 140.64, after earnings and sales outpaced badysts' expectations. This helped pull the technology companies higher. The Adobe software maker increased 7.3% to $ 249.21. Apple jumped 3.8% to $ 180.94 and Microsoft 3.7% to $ 111.12.
Tiffany slid 11.8% to US $ 92.54 after saying foreign tourists, especially Chinese, did not spend as much in its stores during its last quarter. This has contributed to disappointing sales for the company. China's economic growth has slowed since the government put a halt to bank lending last year as part of an effort to curb rising debt. The trade dispute between the United States and China also contributed to the slowdown.
Jam and packaged food maker, J.M. Smucker, fell 7.2% to $ 101.28 after reporting lower earnings and lower earnings than predicted by badysts. Smucker has also lowered its forecasts for the entire year.
Boeing has recovered some of its recent losses as investigators in Indonesia discuss their investigation into the crash of a Boeing 737 MAX 8. Indonesian authorities have said they still have trouble understanding why the aircraft was crushed. Questions about the accident resulted in a decline in Boeing shares. Despite a gain of 4.9% Wednesday, at $ 333.50, it is still down 10% since November 8, when federal regulators have given an emergency directive to pilots how to handle the incorrect data of D & C. A sensor that may have malfunctioned during the flight.
The dollar fell from 113.79 yen to 113.53 yen. The euro went from 1.1296 USD to 1.1376 USD.
The benchmark US crude slid 2.5% to $ 50.29 a barrel in New York. Brent crude, the standard for international oil prices, fell 2.4% to 58.76 dollars a barrel in London.
Wholesale gasoline lost 1.6% to $ 1.40 a gallon. Fuel oil dropped 2.5% to $ 1.84 a gallon. Natural gas rose 10.6% to $ 14.72 per 1,000 cubic feet.
Gold rose 0.8% to $ 1,223.60 an ounce. The money jumped 1.7% to 14.33 dollars an ounce. Copper rose 3.3% to $ 2.80 a pound.
The FTSE 100 in Great Britain fell by 0.2% and the German DAX by 0.1%. The French CAC 40 has changed little.
The Japanese benchmark Nikkei 225 rose by 1% and that of South Korea, Kospi, by 0.4%. Hong Kong's Hang Seng added 1.3%.
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