Wall St rises after Powell signals rate cuts this year

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., March 5, 2024. REUTERS/Brendan McDermid/File photo

Wall Street’s main indexes rose on Wednesday after Federal Reserve Chair Jerome Powell said the central bank expects to reduce its benchmark interest rate later this year.

Powell, in prepared remarks ahead of his congressional testimony, said that inflation had “eased substantially” since hitting 40-year highs in 2022, but that policymakers still needed “greater confidence” in its continued decline before cutting rates.

“No news is good news from Powell,” said David Russell, global head of market strategy at TradeStation.

“We’re still in wait-and-see mode, but at least there’s a broad consensus about where we’re going. Higher rates are becoming less of a danger.”

At the ongoing House panel, the Fed chair also said he thinks an economic soft landing is possible for the United States and that a recession appears unlikely.

READ: Fed’s Powell still sees rate cuts, but inflation progress ‘not assured’

All the 11 major S&P 500 sectors were in the green, led by rate-sensitive information technology stocks.

Wall Street indexes closed more than 1 percent lower on Tuesday amid weakness in megacap stocks and as investor focus shifted to the Fed after signs of sticky inflation in February dampened hopes of early interest rate cuts.

Rate cut bets

Traders see a 72.7-percent chance of the first rate cut this year in June, as per CME Group’s FedWatch tool. At the start of 2024, they were betting on March as the starting point for the Fed’s easing cycle.

Meanwhile, U.S. private payrolls increased slightly less than expected in February, data showed on Wednesday.

Another survey showed job openings fell marginally in January, while hiring declined as labor market conditions continue to gradually ease.

February’s nonfarm payrolls report due on Friday will offer further clarity on the state of the labor market.

At 11:26 a.m. ET, the Dow Jones Industrial Average was up 223.06 points, or 0.58 percent, at 38,808.25, the S&P 500 was up 39.55 points, or 0.78 percent, at 5,118.20, and the Nasdaq Composite was up 132.81 points, or 0.83 percent, at 16,072.40.

AI darling Nvidia outperformed megacap growth peers with an advance of 2.9 percent. Chip rivals also recovered, with the Philadelphia semiconductor index adding 2.7 percent.

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Tesla extended losses for its third straight session, down 2.1 percent. Baird said the EV maker’s first-quarter earnings were at risk, suggesting delivery estimates still need to go lower.

Crypto-linked stocks

U.S.-listed shares of China’s JD.com advanced 17.2 percent after the e-commerce group reported fourth-quarter revenue above estimates and upsized its share repurchase program.

Shares of cryptocurrency-linked companies such as Coinbase Global and MicroStrategy gained 6.9 percent and 17.5 percent, respectively, as bitcoin rebounded.

CrowdStrike Holdings soared 12.1 percent after the company forecast annual results above Wall Street estimates, lifted by strong enterprise spending on cybersecurity to counter rising online threats.

Advancing issues outnumbered decliners by a 3.59-to-1 ratio on the NYSE and by a 1.77-to-1 ratio on the Nasdaq.

The S&P index recorded 42 new 52-week highs and two new lows, while the Nasdaq recorded 79 new highs and 66 new lows.