NEW YORK – Wall Street extended earnings on Wednesday after Federal Reserve Chairman Jerome Powell said the central bank’s key rate was “just below” neutral and suggested that there would be a potential moderation as the policy tightened.
The S & P 500 was up 1.9 percent, while Dow and Nasdaq each advanced more than 2 percent after Powell’s speech to the Economic Club of New York.
In his comments, Powell said that “there was much to like” about the United States prospects, “our gradual increase in interest rates has been an exercise to balance the risks.”
This is on the heels of President Donald Trump’s recent attack on the central bank and says in an interview on Tuesday that Fed “is far from what they are doing.”
“(Powell) gave the market, and probably President Trump, exactly what he wanted, which was an idea that the previously proposed path for future interest rate hikes would probably be too aggressive,” says Oliver Pursche, Marketing Manager at Bruderman Asset Management in New York.
“Powell says we are” near neutral “is a pretty good indication of what to come,” added Pursche.
US Department of Commerce confirmed that US GDP grew by 3.5% annual interest rate in the third quarter, but trade deficit deficit increased, consumer spending revised lower and sales of new housing plunged, indicating cloud clouds what is now the second longest economic expansion on record.
Dow Jones Industrial Average rose 539.18 points, or 2.18 percent to 25.287.91, S & P 500 increased 49.69 points or 1.85 percent to 2.731.86 and the Nasdaq Composite increased 165.49 points or 2.34 percent to 7.248.19.
Of the 11 major sectors of the S & P 500, all but tools were positive. Technology, consumer discretionary healthcare and industry were the largest percentages, each more than 2 percent.
The S & P 500 Automobile & Components Index rose 0.9 percent after President Trump said he was studying new car tariffs in the wake of General Motors Co’s announcement that it would close plants and reduce its staff levels.
At the same time, the GM share has given up its profits since the restructuring announcement.
Health promoter Humana Inc lowered its 2019 forecast for Medicare drug planning, but raised its estimated registration in the company’s Medicare Advantage plan. The share increased by 5.9 percent.
Salesforce.com Inc. analyzed the performance estimates of the analyst and forecasts better than expected 2020 revenues and shifts its shares by 8.4 percent. Other cloud software manufacturers stepped on the news, with the ISE Cloud Index of 2.9 percent.
Microsoft Corp. exceeded Apple Inc. in market capital. The shares increased by 3.2 percent, as Windows software manufacturers benefited from optimism about the demand for cloud computing services.
The Tiffany & Co share decreased by 11.3 percent after the luxury distributor missed quarterly sales estimates to lower Chinese demand.
The pricing problem surpassed falling on NYSE with a ratio of 3.96 to 1; At Nasdaq, a 3.57-to-1 ratio favored progress.
The S & P 500 posted 15 new 52-week and five new downturns; Nasdaq Composite recorded 29 new heights and 113 new flames.
(Reporting by Stephen Culp; Further Reporting by Noel Randewich; Editing Nick Zieminski)