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S&P 500 crosses 3,000 after Fed Chair Powell remarks suggest rate cut – Yahoo Finance


<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="U.S. stocks surged Wednesday morning, reversing losses during early trading after&nbsp;prepared remarks&nbsp;from Federal Reserve Chair Jerome Powell’s congressional testimony suggested the central bank remained open to a near-term rate cut.” data-reactid=”15″>U.S. stocks surged Wednesday morning, reversing losses during early trading after prepared remarks from Federal Reserve Chair Jerome Powell’s congressional testimony suggested the central bank remained open to a near-term rate cut.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The S&amp;P 500 (^GSPC) advanced 0.69%, or 20.55 points, as of 9:59 a.m. ET. The blue chip index hit a new intraday high of 3,002.98, passing the 3,000 level for the first time ever.” data-reactid=”16″>The S&P 500 (^GSPC) advanced 0.69%, or 20.55 points, as of 9:59 a.m. ET. The blue chip index hit a new intraday high of 3,002.98, passing the 3,000 level for the first time ever.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The Dow (^DJI) rose 0.69%, or 185.74 points, while the Nasdaq (^IXIC) increased 1.04%, or 84.58 points. Each index also hit new intraday highs Wednesday morning.” data-reactid=”17″>The Dow (^DJI) rose 0.69%, or 185.74 points, while the Nasdaq (^IXIC) increased 1.04%, or 84.58 points. Each index also hit new intraday highs Wednesday morning.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Powell headed to Capital Hill Wednesday to deliver his semi-annual Monetary Policy Report before Congress, which began at 10 a.m. ET. His prepared remarks were released at 8:30 a.m. ET. In these, Powell said that&nbsp;“uncertainties”&nbsp;around trade tensions and the strength of the global economy continued to mire the central bank’s U.S. economic outlook.” data-reactid=”18″>Powell headed to Capital Hill Wednesday to deliver his semi-annual Monetary Policy Report before Congress, which began at 10 a.m. ET. His prepared remarks were released at 8:30 a.m. ET. In these, Powell said that “uncertainties” around trade tensions and the strength of the global economy continued to mire the central bank’s U.S. economic outlook.

“Chair Jerome Powell’s semi-annual testimony to Congress indicates that, despite the trade truce following the recent G20 meeting and the strength of employment growth in June, the Fed intends to push ahead with a rate cut at the FOMC meeting at the end of this month,” Paul Ashworth, chief U.S. economist for Capital Economics, wrote in a note.

“The rate cut is an insurance against the downside risks that Fed officials believe have mounted in recent months as ‘economic momentum appears to have slowed in some major foreign economies’ with ‘crosscurrents,’ such as trade tensions and those global growth concerns, weighing on U.S. economic activity,” Ashworth explained.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Treasury yields fluctuated after the release of Powell’s prepared statements, with the 10-year Treasury yield (^TNX) up less than a basis point to 2.058% as of 9:38 a.m. ET.” data-reactid=”21″>Treasury yields fluctuated after the release of Powell’s prepared statements, with the 10-year Treasury yield (^TNX) up less than a basis point to 2.058% as of 9:38 a.m. ET.

Market participants will be listening closely to the testimony for further signals affirming when the Fed will move forward with easier monetary policy, after stronger-than-expected employment data last week reflected a still-strong domestic economy.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Earlier Wednesday morning, fed funds futures showed a slim probability of no change to the current level of borrowing costs after the Fed’s July meeting for the first time in weeks, according to&nbsp;CME Group data.&nbsp;However, after Powell’s prepared remarks were released, futures shifted to show markets pricing in a 100% probability of an at least 25 basis point cut to benchmark interest rates.” data-reactid=”23″>Earlier Wednesday morning, fed funds futures showed a slim probability of no change to the current level of borrowing costs after the Fed’s July meeting for the first time in weeks, according to CME Group data. However, after Powell’s prepared remarks were released, futures shifted to show markets pricing in a 100% probability of an at least 25 basis point cut to benchmark interest rates.

Later Wednesday afternoon, the Fed will also release the minutes from its June 18-19 policy meeting. The document will provide further details of how central bankers viewed risks from the trade war between the U.S. and China, before the meeting between President Donald Trump and China’s Xi Jinping took place at the G-20 summit.

Traders work on the floor of the New York Stock Exchange as Federal Reserve Chairman Jerome Powell holds a news conference on the television behind them in New York, U.S., June 19, 2019. REUTERS/Lucas Jackson

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="On Tuesday, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke on the phone with China’s Vice Premier Liu He and Commerce Minister Zhong Shan, China’s Ministry of Commerce&nbsp;confirmed in a statement Wednesday.&nbsp;Few details were provided over the contents of the phone call, which marked the first confirmed contact between the two sides since Trump and Xi met last month and said they would resume trade talks.” data-reactid=”36″>On Tuesday, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke on the phone with China’s Vice Premier Liu He and Commerce Minister Zhong Shan, China’s Ministry of Commerce confirmed in a statement Wednesday. Few details were provided over the contents of the phone call, which marked the first confirmed contact between the two sides since Trump and Xi met last month and said they would resume trade talks.

Elsewhere, the euro-area continues to be dragged down by trade tensions and policy concerns, according to the European Commission. The European Commission on Tuesday cut its euro-area growth forecast for 2020 to 1.4%, from the 1.5% pace of increase expected in the spring. It also slashed its inflation forecast for both 2019 and 2020 to 1.3%, down from 1.4% for each year seen previously.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Meanwhile,&nbsp;economic growth in the U.K. rebounded&nbsp;in May to a 0.3% pace of expansion, after contracting by 0.4% in April, the Office for National Statistics reported Wednesday. The economy grew a better-than-expected 0.3% for the three months to the end of May, amid an easing of concerns of a no-deal Brexit after March and April.” data-reactid=”38″>Meanwhile, economic growth in the U.K. rebounded in May to a 0.3% pace of expansion, after contracting by 0.4% in April, the Office for National Statistics reported Wednesday. The economy grew a better-than-expected 0.3% for the three months to the end of May, amid an easing of concerns of a no-deal Brexit after March and April.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck” data-reactid=”40″>Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Read more from Emily:” data-reactid=”41″>Read more from Emily:

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