- US stocks rose in a volatile trading session on Tuesday after Powell reiterated that inflation was falling.
- Investors also shrugged off Powell’s warning that interest rates could rise, with all three stock indexes ending the day higher.
- The Fed chair said last week the economy was beginning to see disinflation.
US stocks moved upwards in a volatile trading session on Tuesday as Fed Chair Jerome Powell reiterated his view that inflation was falling.
Stocks jumped shortly after the remarks at the Economic Club of Washington, but then fell mid-afternoon as he warned interest rates would likely rise higher. Stocks then whipsawed before the end of the day, with all three benchmark indexes finishing solidly in positive territory.
“We will likely need to do additional rate increases,” Powell said, adding that the Fed would implement more hawkish policy if the labor market remains strong or if inflation stays high. Additionally, he believes the disinflation process would take “a significant period of time.”
For now, markets are pricing in a 25-basis-point rate hike at the Fed’s next meeting in March, followed by another 25-basis-point hike in May, according to the CME FedWatch Tool.
Here’s where US indexes stood at the 4 p.m. market close on Tuesday:
- S&P 500: 4,163.99, up 1.29%
- Dow Jones Industrial Average: 34,156.69, up 0.78% (265.67 points)
- Nasdaq Composite: 12,113.79, up 1.90%
Here’s what else is going on:
- President Biden will try to revive the billionaire minimum tax and call for a big jump in stock buyback taxes in his State of the Union address late Tuesday.
- Turkey stocks dropped and the lira hovered near a record low as the nation declared a three-month state of emergency due to its recent earthquake.
- Oil prices rose as the outlook for China’s demand brightens, and Turkey’s earthquake ignites supply concerns in energy markets.
- Tech stocks have come back with a “vengeance,” and the rally in equities suggests a bull market has dawned, according to Fundstrat’s Mark Newton.
- Meme stocks saw a big sell-off as Bed Bath & Beyond cratered on its plans to raise new funds.
In commodities, bonds, and crypto:
- Oil prices climbed, with West Texas Intermediate up 4.14% to $77.18 a barrel. Brent crude, the international benchmark, rose 3.6% to $83.94 a barrel.
- Gold edged lower 0.1% to $1,869.75 per ounce.
- The 10-year yield ticked up 4 basis points to 3.674%.
- Bitcoin moved higher 0.4% to $23,082,23.