NEW YORK: US stock indexes edged higher on the Nasdaq on Tuesday as investors were relieved that Federal Reserve Chairman Jerome PowellCongress’ testimony did not include any major surprises.
Federal Reserve Chairman Jerome Powell pointed to his possible confirmation for a second term in the job at a congressional hearing, saying the US central bank was determined to ensure that high inflation did not “infiltrate”.
But he said that instead of curtailing job growth, the Fed’s strict plan that includes higher interest rates and a reduction in its asset holdings was necessary to sustain economic expansion.
After falling just 1% on the day, the interest rate sensitive technology sector bounced back and brought the broader indices with them. The technology-powered Nasdaq closed up 1.4%, its biggest daily gain so far this year.
Sean Cruz, senior manager of trader strategy at TD Ameritrade in Chicago, said Powell’s comments reassured investors that the Fed would not prioritize a reduction in inflation above everything else, including employment.
“The initial concern was that the Fed would upset the pace of recovery,” Cruz said. But the investor concluded from Tuesday’s testimony that “he’s not just going to try to crush inflation” without mentioning “other impacts on the economy.”
Investors had been selling stocks since January 5, when Fed officials in the minutes of their December meeting discussed how the “very tight” job market and unrelenting inflation could necessitate a sooner-than-expected interest rate hike and another on the economy. The Fed’s overall asset holdings could decrease as the brakes. ,
While investors will eagerly watch inflation data due Wednesday, Cruz noted that they are already in line with the consensus forecast for the headline consumer price index (CPI) to rise 7% on a year-over-year basis. Only ready for an advanced number.
According to economists surveyed by Reuters, the core CPI, which does not include food and energy prices, is seeing a 5.4% increase.
The Dow Jones Industrial Average rose 183.15 points, or 0.51%, to 36,252.02, the S&P 500 rose 42.78 points, or 0.92%, to 4,713.07, and the Nasdaq Composite rose 210.62 points, or 1.41%, to 15,153.45.
Eight of the 11 key S&P 500 sectors rose, with growth-heavy sectors such as technology, consumer discretionary and communications services contributing the most to the S&P’s gains. The biggest percentage gainer was energy, which ended with crude futures up 3.4%.
The S&P posted a five-day decline, while the Nasdaq added to Monday’s smaller gains. It started the week with an afternoon return as strategists looked for bargains on an influx of retail investors following a sell-off in the opening session.
Marko Kolanovic, chief global market strategist at JPMorgan Chase & Co., issued a research note on Monday, calling the recent pull-back in riskier assets “arguably overdone” and calling it a buying opportunity.
Also on the investor watchlist for this week is the unofficial start of fourth-quarter earnings season on Friday, with big banks expected to show an uptick in quarterly core revenue on fresh lending and firming Treasury yields.
Vaccine maker Moderna closed down 5.3% on Monday after gaining more than 9%. Pfizer’s vaccine partner BioNTech also declined 6.2%. The World Health Organization said more research is needed to determine whether existing COVID-19 vaccines provide sufficient protection against the omicron variant.
Pfizer closed up 0.8%. It said it was reducing the jobs of its US sales staff as it expects doctors and other healthcare providers to have fewer face-to-face sales meetings once the Covid-19 pandemic ends.
Casino operator Las Vegas Sands Corp rose 6.6% after JPMorgan upgraded the stock to an “overweight” rating.
International Business Machines fell 1.6% after UBS downgraded the stock to “sell” and lowered its price target.
Advancing issues declining the 3.05-to-1 ratio on the NYSE; On the Nasdaq, a 2.23-to-1 ratio favored advances. S&P 500 records 28 new 52-week highs and no new lows; The Nasdaq Composite posted 42 new highs and 108 new lows.
Federal Reserve Chairman Jerome Powell pointed to his possible confirmation for a second term in the job at a congressional hearing, saying the US central bank was determined to ensure that high inflation did not “infiltrate”.
But he said that instead of curtailing job growth, the Fed’s strict plan that includes higher interest rates and a reduction in its asset holdings was necessary to sustain economic expansion.
After falling just 1% on the day, the interest rate sensitive technology sector bounced back and brought the broader indices with them. The technology-powered Nasdaq closed up 1.4%, its biggest daily gain so far this year.
Sean Cruz, senior manager of trader strategy at TD Ameritrade in Chicago, said Powell’s comments reassured investors that the Fed would not prioritize a reduction in inflation above everything else, including employment.
“The initial concern was that the Fed would upset the pace of recovery,” Cruz said. But the investor concluded from Tuesday’s testimony that “he’s not just going to try to crush inflation” without mentioning “other impacts on the economy.”
Investors had been selling stocks since January 5, when Fed officials in the minutes of their December meeting discussed how the “very tight” job market and unrelenting inflation could necessitate a sooner-than-expected interest rate hike and another on the economy. The Fed’s overall asset holdings could decrease as the brakes. ,
While investors will eagerly watch inflation data due Wednesday, Cruz noted that they are already in line with the consensus forecast for the headline consumer price index (CPI) to rise 7% on a year-over-year basis. Only ready for an advanced number.
According to economists surveyed by Reuters, the core CPI, which does not include food and energy prices, is seeing a 5.4% increase.
The Dow Jones Industrial Average rose 183.15 points, or 0.51%, to 36,252.02, the S&P 500 rose 42.78 points, or 0.92%, to 4,713.07, and the Nasdaq Composite rose 210.62 points, or 1.41%, to 15,153.45.
Eight of the 11 key S&P 500 sectors rose, with growth-heavy sectors such as technology, consumer discretionary and communications services contributing the most to the S&P’s gains. The biggest percentage gainer was energy, which ended with crude futures up 3.4%.
The S&P posted a five-day decline, while the Nasdaq added to Monday’s smaller gains. It started the week with an afternoon return as strategists looked for bargains on an influx of retail investors following a sell-off in the opening session.
Marko Kolanovic, chief global market strategist at JPMorgan Chase & Co., issued a research note on Monday, calling the recent pull-back in riskier assets “arguably overdone” and calling it a buying opportunity.
Also on the investor watchlist for this week is the unofficial start of fourth-quarter earnings season on Friday, with big banks expected to show an uptick in quarterly core revenue on fresh lending and firming Treasury yields.
Vaccine maker Moderna closed down 5.3% on Monday after gaining more than 9%. Pfizer’s vaccine partner BioNTech also declined 6.2%. The World Health Organization said more research is needed to determine whether existing COVID-19 vaccines provide sufficient protection against the omicron variant.
Pfizer closed up 0.8%. It said it was reducing the jobs of its US sales staff as it expects doctors and other healthcare providers to have fewer face-to-face sales meetings once the Covid-19 pandemic ends.
Casino operator Las Vegas Sands Corp rose 6.6% after JPMorgan upgraded the stock to an “overweight” rating.
International Business Machines fell 1.6% after UBS downgraded the stock to “sell” and lowered its price target.
Advancing issues declining the 3.05-to-1 ratio on the NYSE; On the Nasdaq, a 2.23-to-1 ratio favored advances. S&P 500 records 28 new 52-week highs and no new lows; The Nasdaq Composite posted 42 new highs and 108 new lows.
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