(New York) The New York Stock Exchange ended on a jump on Wednesday, reassured by the statements of Jerome Powell, the boss of the Fed, who signaled the possibility of a moderation in rate hikes at the next monetary meeting.
By gaining more than 700 points or 2.2%, to 34,589.77 points, the Dow Jones index has left the bear market, the bear market it entered in September, losing 20% since its last peak. The tech-heavy NASDAQ jumped 4.4% to 11,468 points, and the S&P 500 jumped 3.1% to 4,080.11 points.
The President of the American Central Bank confirmed what the stock markets expected.
In a speech, followed by a question and answer session at the Brookings Institution in Washington, Jerome Powell signaled that a more moderate rate hike than previous ones was in sight for the next monetary meeting on December 14.
“The time to slow the pace of rate hikes could come as early as the December meeting,” Powell said, while indicating that “tight” monetary policy would remain in place “for a while” to curb inflation. which remains “too strong”.
This portends, as investors anticipate, a hike in overnight rates of half a percentage point rather than three-quarters of a point like the previous four times.
Now, a 50 basis point hike in two weeks is indeed the preferred scenario for 77% of investors, up from 66% on Tuesday, according to CME’s futures instruments measures.
“Several points were important in his statement: the more modest rate hikes going forward, their level which will remain restrictive for a while, but he also pointed to the fact that there were fewer vacancies, which marks a sought-after cooling of the labor market, and above all, he affirmed that a soft landing of the economy was “very plausible”, summarized for AFP Peter Cardillo, of Spartan Capital.
The market immediately reacted positively to this speech, the broader S&P 500 index, the most representative of the American market, settling comfortably above 4000 points.
“This is a good indication that the Fed has given a green light to the stock market’s end-of-year recovery,” commented Peter Cardillo.
The dollar fell sharply given this conciliatory tone from Mr. Powell, the greenback dropping 0.84% against the euro, and 10-year bond yields eased to 3.63%, from 3 .74% the day before.
With its lower exposure to the technology sector and disappointing bank profits, the Toronto Stock Exchange has not rebounded as drastically as the American indices.
The Canadian dollar, for its part, appreciated against the weakness of the US greenback.
However, the day was dotted with mixed indicators.
The Fed’s Beige Book showed stagnant economic activity over the past six weeks and a somewhat slower pace of inflation. But “many contacts expressed greater uncertainty or pessimism about the outlook,” the report said.
As official U.S. jobs figures are awaited on Friday, private business hiring in November was much weaker than expected at 127,000, the steepest slowdown in nearly two years, according to the monthly ADP/Stanford Lab survey.
Separately, the Commerce Department revised third-quarter gross domestic product growth up to 2.9% annualized, thanks in part to stronger consumer spending than previously estimated.
Finally, in a new sign of the cooling of the real estate market, the promises of home sales fell in October by 4.6% and by 37% for a year.
All sectors ended in the green, with information technology in the lead (+5%).
With The Canadian Press