All three key U.S. stock indices finished below their session peaks, showing a partial recovery from the previous day’s significant decline
Wall Street echoed the global stock markets’ positive trend on Wednesday, with the major U.S. stock indexes closing higher. The U.S. Treasury yield also decreased to a one-month low following Federal Reserve Chair Jerome Powell’s comments on potential rate cuts this year to address inflation concerns.
All three key U.S. stock indices finished below their session peaks, showing a partial recovery from the previous day’s significant decline. The Nasdaq experienced the most substantial increase.
Powell’s statements to the House of Representatives Financial Services Committee indicated that the central bank might reduce its policy rate in 2024 if the economy progresses as anticipated. He emphasized that there are no guarantees of continued success in combating inflation.
Furthermore, Powell expressed confidence in the Fed’s ability to manage inflation effectively without causing an economic downturn. He reassured that the U.S. economy is not currently at risk of an imminent recession.
Powell is scheduled to conclude his testimony before the Senate Banking Committee on Thursday, following which the European Central Bank is expected to announce its policy decision.
Powell didn’t rock the boat, said Ryan Detrick, chief market strategist at Carson Group in Omaha. He made it clear cuts likely will come later this year and at the same time the economy remains on firm footing.
There was relief that he come off more hawkish, Detrick added.
Meanwhile, labour market data released ahead of the February employment report showed a decrease in job openings and lower-than-expected job additions by private employers in February.
Powell emphasized that a weaker U.S. labor market is crucial for achieving the Fed’s 2% annual inflation target.
The Dow Jones Industrial Average increased by 0.2%, the S&P 500 rose by 0.51%, and the Nasdaq Composite gained 0.58%.
In Europe, the STOXX 600 index climbed by 0.39%, and MSCI’s global stock index increased by 0.59%.
Emerging market stocks rose by 0.67%, while the Asia-Pacific shares outside Japan surged by 0.78%, although Japan’s Nikkei experienced a slight decline of 0.02%.
