Stocks - Wall Street Hits Highs as Powell Hints Rate Cut Is Ahead
Investing.com – Stocks rallied Wednesday and hit new highs after Federal Reserve Chairman Jerome Powell assured lawmakers the central bank will do what it can to sustain the economic expansion.
The Fed will "act as appropriate," Powell told the House Financial Service Committee in the first of two days of testimony about the state of the economy. It is a phrase he has used often in the last few months because he and the Fed are worried about the domestic economy and slowing business investment, trade disputes and other issues affecting global economic health.
But it was music to investors' ears. The NASDAQ Composite surged 0.75%, hitting new closing and intraday highs. The S&P 500 jumped at the open, briefly topping 3,300 for the first time before dropping back to a 0.45% gain and just under its July 3 close of 2,995.82 The Dow Jones industrials added 0.3%, also reaching a new intraday high of 26,983, up 200 points from the day before. But then the blue chips slid back.
The stock rally was accompanied by a 4.5% jump in oil prices, which was partly due to worries that storms in the Gulf of Mexico will shut down offshore production wells. The Gulf produces about 17% of U.S. crude oil. West Texas Intermediate crude, the benchmark U.S. oil, finished up $2.60 to $60.43 a barrel. Brent crude , the global benchmark, added $2.85 to $67.01. WTI is up 33% this year, while Brent is up nearly 25%.
Gold, meanwhile, moved solidly above $1,400 an ounce, finishing at $1,212.50 an ounce, and palladium shot up toward $1,600 an ounce.
But the big question of the day was if the Fed believes it needs to cut interest rates. And Powell offered many reasons that seemed to suggest a rate cut is coming at its July 30-31 meeting. Investing.com's Fed Rate Monitoring tool suggests the Fed will cut its key federal funds rate to 2%-2.25% from 2.25-2.5%. And maybe another rate cut in the fall.
Rates have been coming down as global economic worries -- most prominently the U.S.-China trade dispute and tensions in the Middle East -- grabbed investor attention. But Wednesday, longer term rates were higher. The 10-year Treasury yield moved up to 2.07% from 2.06% as investors shed bonds for stocks. The 10-year yield is still off 23% this year.
The market was led by energy stocks, thanks to the boost in oil prices. Chevron (NYSE: CVX ) was the Dow leader with a 1.7% gain. Exxon Mobil (NYSE: XOM ) added 1.4%.
Communications services, including Amazon.com (NASDAQ: AMZN ) and Google parent Alphabet (NASDAQ: GOOGL ), also were market leaders, along with tech stocks. Microsoft (NASDAQ: MSFT ), Apple (NASDAQ: AAPL ) and Intel (NASDAQ: INTC ) were all up 1%.
After hours, shares of Bed Bath & Beyond (NASDAQ: BBBY ) rose 3.5% after earnings beat estimates.
Winners and losers in the S&P 500
Chesapeake Energy (NYSE: CHK ), data-storage company Western Digital (NASDAQ: WDC ) and healthcare technology manufacturer Align Technology (NASDAQ: ALGN ) were among the top S&P 500 performers on the day.
Hanesbrands (NYSE: HBI ), life-insurance company Unum Group (NYSE: UNM ) and equipment distributor WW Grainger (NYSE: GWW ) were among the weakest S&P 500 performers.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.
Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb
Drop an image here or