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Wall Street rises as Fed’s Powell steers clear of monetary policy outlook

  • Broadcom falls on report of Apple’s plan to replace the chip
  • Indexes on the rise: Dow 0.08%, S&P 0.07%, Nasdaq 0.16%

Jan 10 (Reuters) – Wall Street’s main indexes rose on Tuesday as Federal Reserve Chairman Jerome Powell avoided commenting on the outlook for monetary policy, with the focus on an upcoming inflation reading due later this week.

Powell’s remarks, which gave no indication of the Fed’s plans for future tightening, came as a relief after the other two policymakers struck a note of caution on the outlook for interest rates on Monday.

“He (Powell) hasn’t disrupted the market in any way and the fact that he’s emphasizing the need for political independence while fighting inflation is definitely positive for the markets,” said Peter Cardillo, chief market economist at Spartan Capital Securities, New York.

Traders held back bets on a 25-basis-point rate hike at the U.S. central bank’s upcoming meeting in February, with the terminal rate just below 5% through June.

Markets had hoped the Fed could soon signal the end of its rate hike cycle following recent signs of a slowing U.S. economy, even as policymakers reiterated the central bank’s priority to bring inflation under control.

“The Fed needs to do some more tightening,” said David Russell, vice president of market intelligence at TradeStation Group, adding that Thursday’s inflation report will be key in shaping interest rate expectations.

The long-awaited Consumer Price Index (CPI) report from the US Department of Labor is expected to show some year-over-year price moderation in December.

The Fed’s aggressive monetary policy, tightening to curb decades-high inflation, hit US stocks in 2022, with the three major indexes posting their biggest annual declines since 2008.

Fed Governor Michelle Bowman said on Tuesday that the US central bank will need to raise interest rates further to fight high inflation.

Among major S&P 500 sectors, retailers ( .SPKSRT ) rose 0.8% to lead the way, while consumer discretionary stocks ( .SPLRCD ) rose 0.2% and Amazon.com Inc ( AMZN.O made gains in both sub-indices.

Healthcare stocks (.SPKSHC) rose 0.5% and were also a big boost to the benchmark S&P 500 index.

At 11:59 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 28.41 points, or 0.08%, at 33,546.06, the S&P 500 (.SPKS) was up 2.71 points, or 0. 07%, to 3,894.80sdak, and Na Composite (.IKSIC) rose by 17.25 points, or 0.16%, to 10,652.90.

Broadcom Inc ( AVGO.O ) fell 3.4% on reports that Apple Inc ( AAPL.O ) plans to replace the Broadcom chip in its devices with its own design in 2025.

Advances outnumbered decliners by a ratio of 1.17 to 1 on the NISE and 1.62 to 1 on the Nasdaq.

The S&P posted one new 52-week high and no new lows, while the Nasdaq posted 37 new highs and 20 new lows.

Reporting by Ankika Biswas, Amruta Khandekar and Johann M Cherian in Bengaluru; Editing by Shinjini Ganguly and Shounak Dasgupta

Our Standards: Thomson Reuters Trust Principles.

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