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US stocks surge as investors greet Powell speech
NEW YORK, Nov 29, 2018 (BSS/AFP) – Wall Street toasted a speech by Federal
Reserve Chair Jerome Powell on Wednesday hinting that interest rates might
not rise much further, prompting the Dow’s biggest gain since March.
Powell, in remarks to the New York Economic Club, charted a middle ground,
saying rates still were still historically low but only “just below” the
estimate of neutral — a rate that neither stimulates nor restrains the
economy.
Powell’s characterization of interest rates as nearly normal “were the
magic words,” said Gregori Volokhine of Meeschaert Financial Services.
“That’s what the market wanted to hear.”
The remarks were considered “dovish” in light of Powell’s remarks last
month that interest rates were “a long way from neutral.”
US stocks opened higher and rallied more after Powell’s speech, with the
Dow Jones Industrial Average finishing up more than 600 points, or 2.5
percent, to 25,366.43.
Virtually all members of the blue-chip index advanced, with equities that
had slumped recently, such as Apple and Boeing gaining 3.9 percent and 4.0
percent, respectfully.
Not everyone viewed Powell’s remarks as a game-changer.
Ian Shepherdson, chief economist of Pantheon Macroeconomics, said markets
were reading too much into Powell’s statement and, given historically low
unemployment, the Fed might have no choice but to keep raising rates.
Shepherdson estimated that the Fed was still three interest rate hikes from
the middle of the range for “neutral.”
But Sam Stovall of CFRA Research said Powell’s remarks “has likely lit the
fuse for an end-of-year celebration,” especially if weekend talks between US
President Donald Trump and Chinese leader Xi Jinping yield progress on trade.
European stock markets meanwhile were mostly steady at the close.
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WORLD-MARKETS 2 LAST NEW YORK
London’s assessment that the UK will be worse off outside the EU than
inside hardly came as a surprise, but its predictions of lost economic growth
were actually more optimistic than many had feared.
“It is a relief that output would ‘only’ drop 3.9 percent in the long term,
as some economists had predicted much severe economic damage from leaving the
EU,” said Fawad Razaqzada, a market analyst at Forex.com.
Oil prices dropped after the US reported a tenth straight weekly increase
in stockpiles, adding to fears of an oil supply overhang.
– Key figures around 2140 GMT –
New York – Dow Jones: UP 2.5 percent at 25,366.43 (close)
New York – S&P 500: UP 2.3 percent at 2,743.78 (close)
New York – Nasdaq: UP 3.0 percent at 7,291.59 (close)
London – FTSE 100: DOWN 0.2 percent at 7,004.52 (close)
Frankfurt – DAX 30: DOWN 0.1 percent at 11,298.88 (close)
Paris – CAC 40: FLAT at 4,983.24 (close)
EURO STOXX 50: UP 0.1 percent at 3,168.29 (close)
Tokyo – Nikkei 225: UP 1.0 percent at 22,177.02 (close)
Hong Kong – Hang Seng: UP 1.3 percent at 26,682.56 (close)
Shanghai – Composite: UP 1.1 percent at 2,601.74 (close)
Pound/dollar: UP at $1.2824 from $1.2747 at 2200 GMT
Euro/pound: FLAT at 88.61 pence
Euro/dollar: DOWN at $1.1369 from $1.1289
Dollar/yen: DOWN at 113.65 yen from 113.79
Oil – Brent Crude: DOWN 98 cents at $59.42 per barrel
Oil – West Texas Intermediate: DOWN 77 cents at $50.79
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