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Wall Street reaches new heights after comments by Powell, the Fed

Traders work on the ground at the NYSE in New York
Traders work on the New York Stock Exchange (NYSE) in New York, USA on July 1, 2019. REUTERS / Brendan McDermid

July 10, 2019

By Caroline Valetkevitch

NEW YORK (Reuters) – US stocks finished higher and the S & P 500 briefly broke the 3,000 mark on Wednesday, as Federal Reserve Chairman Jerome Powell reassured investors of the potential. interest rate reduction at the end of the month.

The Dow also broke an intraday record and the Nasdaq closed to an all-time high after the remarks prepared in Powell's testimony before the US House of Representatives Financial Services Committee.

Powell said the central bank is ready to "act as needed" to support record economic growth in the United States.

"That's what the market wanted to hear," said J.J. Kinahan, chief markets strategist at TD Ameritrade in Chicago. "Many people thought that the jobs report – a data point – would suddenly change the way the Fed thinks. But the Fed tends to operate on trends and not on data. "

After Powell's remarks and the release of the Fed's minutes, interest rate futures appeared to be more and more likely to aggressively lower rates this month. Expectations for a 50bp cut, which was almost stifled Friday by stronger than expected US employment data, jumped to 26.6%, according to CME's FedWatch tool.

The S & P 500 broke the 3,000 mark just after the opening, but finished slightly below that level at 2,993.07 points. Some investors have said this step could boost confidence in a market that has hit record highs this year.

Amazon.com, Microsoft Corp, and Apple Inc. have been among the biggest index boosters.

The Dow Jones Industrial Average rose 76.71 points, or 0.29%, to 26,860.2, the S & P 500 13.44 points, or 0.45%, to 2,993.07 and the Nasdaq Composite added 60.80 points, or 0.75%, to 8,202.53.

In testimony – the first two-day payout to Capitol Hill this week – Powell pointed to a "big" global weakness clouding the US economic outlook amidst the uncertainties surrounding the fallout from the Trump administration's trade dispute with China. other important savings.

The shares briefly added to the gains made after the Fed's last decision-maker meeting, which showed that many US central bankers thought it would soon be more stimulus if the risks to the economy did not falter.

The S & P 500 Financial Equity Index, including banks, which tend to benefit from higher interest rates, declined 0.5% after Powell's comments.

According to investors, this year's stock gains are largely due to the Fed's shift in outlook, which has become more accommodative on interest rate policy.

"Overall, investors respect the creed:" do not fight the Fed, "and if rates are lowered – whatever the reason – they have often looked after stocks, so I'm not surprised that we were reaching new heights, "said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

"But it's a market that has come a long way. And I think you are short of investors willing to inject too many new funds with no indication that profits can remain high. "

(GRAPHIC – S & P 500 climbs between 1,000 points: https://tmsnrt.rs/2G6JN87)

Increasing issues outnumbered NYSE declines with a ratio of 1.92 to 1; on the Nasdaq, a ratio of 1.19 to 1 favored advances.

The S & P 500 recorded 73 new highs in 52 weeks and two new lows; the Nasdaq Composite recorded 99 new highs and 43 new lows.

The volume of US trade amounted to 6.38 billion shares, against 6.72 billion on average for the full session of the last 20 trading days.

(Caroline Valetkevitch report, additional April Joyner report in New York and Medha Singh, Manas Mishra and Shreyashi Sanyal in Bengaluru, edited by Bill Berkrot)

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