[ad_1]
The New York Stock Exchange boosted its gains on Wednesday after a speech by US Central Bank (Fed) chairman Jerome Powell, who said interest rates were close to a neutral level for the economy.
After crossing the 2% mark at 18:30 GMT, its flagship index, the Dow Jones Industrial Average, continued to climb: it was up 2.18% to 25,288.82 points, around 18:45 GMT.
The broad-based S & P 500 index rose 1.87% and the Nasdaq index, with strong technological color, was up by 2.40%.
In front of the New York Economic Club, the boss of the Fed "said the magic words" that the market was waiting, commented Gregori Volokhine, Meeschaert Financial Services.
"If we are almost at a neutral level, that may mean that we will be there after December's rise (rates) and then the Fed can stay there for a while," he said. .
Enough to rebadure Wall Street investors, who have benefited in recent years from the accommodative policy of the Central Bank. For several months they have been worried that interest rates will rise too quickly, which could, in their view, slow down growth by making loans for individuals and businesses more expensive.
"No dangerous drifts"
Market players were troubled when Powell said in early October that the Fed was "still very far" from the "neutral" rate it aspires to, one that promotes growth without feeding prices. These remarks had largely contributed to trigger a period of strong turbulence on Wall Street.
Market observers have been scrutinizing all institution officials for this neutral rate, trying to spot the number of future interest rate hikes.
The vice president of the institution, Richard Clarida, had already estimated Tuesday that interest rates were "closer" to the neutral rate. "Near to what point is a matter of judgment, and there is a variety of views within the FOMC," the Monetary Committee of the Central Bank had, however, added.
However, Powell's comments on Wednesday are "not as cautious as the market thinks," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
The Fed chief actually felt that the rates were just below the "range of estimates" of the level at which they can be considered neutral, he said.
If we consider that this range is currently between 2.5% and 3.5%, "there are still three increases before reaching the middle," he said. And this range in itself could be expected to increase over the next few months if productivity continues to increase, he added.
The dollar, which becomes more profitable when interest rates rise, has, conversely, declined sharply, especially against the euro: the single currency was worth 1,1381 dollar around 18:45 GMT, against 1,1286 dollar just before the broadcast of the speech.
In the bond market, the US 10-year debt rate fell to 3.045% from 3.068% just before Mr. Powell's intervention.
He also badured that he did not see "dangerous drifts" in valuations on the stock market.
"Today, equity market prices broadly match historical benchmarks" as the ratio between the price of a stock and the future earnings of the company that issued it, Powell said. "From the point of view of financial stability, we do not see today dangerous drifts in the stock market," he said.
- Nasdaq
■
Source link
