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U.S. stocks rose on Wednesday as investors took in Powell’s comments on interest rates.
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He said interest rates could be cut “significantly” over the next few years.
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However, the fate of interest rates will depend on whether inflation continues to cool.
U.S. stocks rose on Wednesday after markets accepted Chairman Jerome Powell’s testimony to Congress and the central bank’s chief said the central bank was still considering a rate cut in 2024.
All three benchmark indexes rose, but bond yields fell slightly.
Powell said the U.S. remains on a “good trajectory” for a soft landing, a scenario in which inflation falls to the Fed’s 2% goal without the economy slipping into recession. Stated.
“We expect inflation to decline and the economy to continue to grow…If that’s the case, it would be appropriate for interest rates to be significantly lower over the next few years,” Powell said in his first day of testimony to Congress.
Markets appeared to be ignoring the more hawkish comments from the Fed chairman, who also noted that it was not yet certain that inflation would fall to 2%.
“The Fed can afford to keep raising rates until the labor market starts to crack,” Jamie Cox, managing partner at Harris Financial Group, said in a statement Wednesday. “Maximum employment is the stronger of the two mandates to cut rates, and there is no room to force a rate cut at this point,” he said.
However, some investors are still betting on aggressive rate cuts by the end of the year. The market has priced in a 51% chance that the Fed will cut rates by more than 75 basis points, according to the CME FedWatch tool.
Local banking turmoil began again after the Wall Street Journal reported that New York Community was considering raising capital to stabilize its business. Shares fell as much as 47%, but soared again after the bank announced it would receive a $1 billion infusion from a group that includes the company and is led by former Treasury Secretary Steven Mnuchin.
Here are the US indexes as of Wednesday’s 4pm close:
Here’s what else is happening today:
In Commodities, Fixed Income and Cryptocurrencies:
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West Texas Intermediate crude oil rose 1.15% to $79.05 a barrel. Brent crude, the international benchmark, rose 1% to $82.85 a barrel.
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Gold rose 0.6% to $2,155.10 an ounce.
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The 10-year Treasury yield fell 2 basis points to 4.1% to 8%.
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Bitcoin rose 7.72% to $67,428.
Read the original article on Business Insider
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