NEW YORK (Reuters) – Comments by U.S. Federal Reserve Chair Jerome Powell that interest rates were “just below” neutral propelled Wall Street higher on Wednesday, easing investor worries about the pace of interest rate hikes next year.
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., November 26, 2018. REUTERS/Brendan McDermid
Hopes that the United States and China could call a trade war ceasefire at the upcoming G20 summit also helped stocks.
Meanwhile, the dollar retreated with potentially fewer rate increases on the horizon, and sterling rose after the Bank of England said the economy could shrink by as much as 8 percent in about a year after a no-deal Brexit.
Equity investors reacted favorably to the comments by Powell, who indicated there may not be as many future interest rate hikes from the central bank as was initially anticipated.
“He gave the market, and presumably President Trump, exactly what he wanted, which was an admission that the previously proposed path of future rate hikes was probably too aggressive,” said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York.
U.S. President Donald Trump has recently been critical of the Fed for raising rates.
The Dow Jones Industrial Average rose 546.57 points, or 2.21 percent, to 25,295.3, the S&P 500 gained 45.25 points, or 1.69 percent, to 2,727.42 and the Nasdaq Composite added 148.44 points, or 2.1 percent, to 7,231.14.
The pan-European STOXX 600 index was down 0.01 percent and MSCI’s gauge of stocks across the globe gained 0.08 percent.
Earlier, hopes for a U.S.-China truce on trade had also helped lift equities.
Despite Trump’s tough remarks on the trade dispute ahead of Saturday’s meeting with Chinese President Xi Jinping, markets focused on comments by White House economic adviser Larry Kudlow,