Stock market today: Dow ends higher as Powell offers scant new clues on policy
By Yasin Ebrahim
Investing.com --The S&P 500 jumped in wild trading after Federal Reserve chairman Jerome Powell offered little new clues on policy in a speech Tuesday, reiterating the need for more rate hikes in what will likely be a long-drawn-out battle against inflation.
The Dow Jones Industrial Average gained 0.78% or 265 points, the S&P 500 rose 1.3%, and the Nasdaq jumped 1.9%
"The bears have been squeezed all year in 2023, they are in a very precarious position," Zhiwei Ren, Managing Director and Portfolio Manager at Penn Mutual Asset Management told Investing.com's Yasin Ebrahim on Tuesday. "They hoped the Fed would send a strong hawkish signal today, after the strong job data last week. But we didn't get that, Powell didn't say anything new today," Ren added.
Powell's remarks were largely a repeat of his prior remarks, but many were eager to see if the recent January jobs report would force him to tilt more hawkish. Powell admitted that last week's jobs report was stronger than anyone had expected, and was further evidence that inflation will take a long time to ease to the Fed's 2% target.
Bringing down inflation will take a “significant period of time,” Powell said Tuesday to the Economic Club of Washington, reiterating the need for ongoing rate hikes.
"[W]e think that we're going to need to do further rate increases, as we said [at the February meeting], and we think that we'll need to hold policy and restrictive level for a period of time,” he added.
After choppy trading, bullish bets on stocks prevailed, driven by a surge in big tech.
Microsoft Corporation (NASDAQ: MSFT ) and Alphabet Inc (NASDAQ: GOOGL ) led to the upside just as the AI arms race between the two tech heavyweights and others in big tech gets underway.
A day after Google released its AI-powered chatbot Bard, Microsoft held an event detailing plans to integrate ChatGPT into its search engine Bing as well as other products.
“With new and attractive features for its users on the Bing search engine, MSFT’s AI-driven strategy is set to challenge the web search market by grabbing market share as users see increased benefits and a new user experience,” Wedbush said in a note.
Energy was also among the leading sectors on the day as oil prices were supported by a weaker dollar and ongoing China-led demand optimism.
Valero Energy Corporation (NYSE: VLO ), Marathon Petroleum (NYSE: MPC ), and Occidental Petroleum Corporation (NYSE: OXY ) were the biggest gainers.
On the earnings front, Chegg Inc (NYSE: CHGG ) fell 17% after reporting guidance that missed Wall Street expectations amid a softer backdrop for subscriber growth. Pinterest Inc 's (NYSE: PINS ) mixed quarterly results that missed on the top line sent its shares down 5%.
In deal news, CVS Health (NYSE: CVS ) is reportedly closing in on a deal to buy the primary-care provider Oak Street Health (NYSE: OSH ) for $10.5 billion.
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