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The New York Stock Exchange ended sharply higher Wednesday, welcoming remarks by the President of the US Central Bank (Fed) suggesting a possible slowdown in the rate of rise in interest rates.
Its flagship index, the Dow Jones Industrial Average, gained 2.50% to close at 25,366.43 points, recording occasionally its best session since March.
The Nasdaq, with strong technological coloration, took 2.95% to finish at 7,291.59 points.
The broad S & P 500 Index gained 2.30% to end at 2,743.78 points.
In front of the New York Economic Club, the boss of the Fed simply "said the magic words" that the market was waiting, said Gregori Volokhine of Meeschaert Financial Services.
Investors had indeed been troubled when Jerome Powell had estimated in early October that the Fed was "still very far" from the "neutral" rate to which it aspires, one that promotes growth without feeding price increases. These remarks had largely contributed to trigger a period of strong turbulence on Wall Street.
Believing Wednesday that rates were "just below" a neutral level, "he said it was close to the end of the cycle of rising rates," said Peter Cardillo of Spartan Capital Securities.
"We can probably still expect a new rise in December, but maybe only one or two next year," where market observers have been anticipating two to three hikes so far. He underlines.
Enough to reassure investors on Wall Street, who fear for several months a too rapid rise in interest rates. An abrupt tightening of US monetary policy could, in their view, slow growth by making particularly expensive loans for individuals and businesses.
"The fact that Powell repeated that monetary policy will be decided on the basis of economic data has also reassured investors," Cardillo says. This suggests that the institution will adjust its decisions if the economy slows down.
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 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.
In the bond market, the US 10-year debt rate stabilized at 21:15 GMT to 3.056%, against 3.057% Tuesday at the close, and that at 30 years climbed to 3.345%, against 3.319% the day before.
© 2018 AFP
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