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Wall Street closes higher after Powell testimony eases investors' concerns

EconomyJan 11, 2022 07:57PM ET
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© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 10, 2022. REUTERS/Brendan McDermid

By Sinéad Carew

(Reuters) - U.S. stock indexes gained ground on Tuesday with Nasdaq leading the advance as investors were relieved that Federal Reserve Chair Jerome Powell's testimony to Congress did not include any major surprises.

Federal Reserve Chair Jerome Powell, in a congressional hearing that pointed to his likely confirmation for a second term in the job, said the U.S. central bank, was determined to ensure high inflation did not become "entrenched."

But he added that rather than diminishing job growth, the Fed's tightening plans which include higher interest rates and a reduction in its asset holdings were necessary to maintain the economic expansion.

After falling just 1% earlier in the day, the interest rate sensitive technology sector bounced back and brought the broader indexes with it. Technology-laden Nasdaq closed up 1.4% marking its biggest daily gain so far this year.

Powell's comments likely reassured investors that the Fed was not going to prioritize inflation reduction above everything else, including employment, said Shawn Cruz, senior manager of trader strategy at TD Ameritrade in Chicago.

"The initial concern was the Fed would upset the pace of the recovery," said Cruz. But the investor takeaway from Tuesday's testimony was that "he's not just going to try and crush inflation" without regarding "the other effects that could have on the economy."

Investors had been selling stocks since Jan. 5 when December meeting minutes showed Fed officials discussing how "very tight" job market and unabated inflation might require interest rate hikes sooner than expected and a reduction of the Fed's overall asset holdings as a second brake on the economy.

While investors will anxiously watch inflation data due out on Wednesday, Cruz notes that they are already prepared for an elevated number with consensus forecasts for a 7% increase on a year-on-year basis for the headline Consumer Price Index (CPI).

Core CPI, which excludes food and energy prices, is seen rising by 5.4%, according to economists polled by Reuters.

The Dow Jones Industrial Average rose 183.15 points, or 0.51%, to 36,252.02, the S&P 500 gained 42.78 points, or 0.92%, to 4,713.07 and the Nasdaq Composite added 210.62 points, or 1.41%, to 15,153.45.

Eight of the 11 major S&P 500 sectors rose, with growth-heavy sectors like technology, consumer discretionary and communications services contributing most to the S&P's gains. The biggest percentage gainer was energy, which finished up 3.4%, as crude oil futures rose. (OR)

The S&P snapped a five-day slump, while the Nasdaq added to Monday's tiny gain. It had started the week with an afternoon comeback that strategists attributed to an influx of retail investors hunting for bargains after an early session sell-off.

Marko Kolanovic, chief global markets strategist at JPMorgan Chase & Co (NYSE:JPM), on Monday issued a research note calling the recent pull-back in riskier assets "arguably overdone" and calling it a buying opportunity. [nL1N2TQ2DY

Also on investor watchlists for this week is the unofficial start of the fourth-quarter earnings season on Friday, with big banks expected to show an uptick in quarterly core revenue thanks to new lending and firming Treasury yields.

Vaccine maker Moderna (NASDAQ:MRNA) finished down 5.3% after rising more than 9% on Monday. Pfizer (NYSE:PFE)'s vaccine partner BioNTech also fell 6.2%. The World Health Organization said more research is needed to find out if existing COVID-19 vaccines provide adequate protection against the Omicron variant.

Pfizer closed up 0.8%. It said it was reducing its U.S. sales staff jobs as it expects doctors and other healthcare providers to want fewer face-to-face sales meetings after the COVID-19 pandemic ends.

Casino operator Las Vegas Sands (NYSE:LVS) Corp rose 6.6% after J.P. Morgan upgraded the stock to a "overweight" rating.

International Business Machines (NYSE:IBM) fell 1.6% after UBS downgraded the stock to "sell" and slashed its price target.

Advancing issues outnumbered declining ones on the NYSE by a 3.05-to-1 ratio; on Nasdaq, a 2.23-to-1 ratio favored advancers.

The S&P 500 posted 28 new 52-week highs and no new lows; the Nasdaq Composite recorded 42 new highs and 108 new lows.

On U.S. exchanges 10.58 billion shares changed hands compared with the 10.55 billion average for the last 20 sessions.

Wall Street closes higher after Powell testimony eases investors' concerns
 

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Comments (21)
David Sather
David Sather Jan 24, 2022 6:58PM ET
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This is two weeks old.
David Sather
David Sather Jan 24, 2022 6:53PM ET
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Today is the 24th of january. Whats wrong with you people?
David Sather
David Sather Jan 24, 2022 6:50PM ET
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Why you showing old news??????
Jamie Kent
Jamie Kent Jan 14, 2022 6:44AM ET
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The Fed is trapped. raise rates and the monstrous us debt becomes unserviceable; keep rates low and inflation becomes hyperinflation. There is no right move anymore.
Adam Paine
Adam Paine Jan 11, 2022 11:40PM ET
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I just think we are shrugging off too much these days. what's wrong with confronting the moment? too scary? we can live with it
perplexed76 .
perplexed76 . Jan 11, 2022 10:47PM ET
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i don't understand if they are investors or bank depositors? why he dancing befor gamblers.
Adam Paine
Adam Paine Jan 11, 2022 10:47PM ET
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whew, thank goodness he didn't say he was ending tapering, selling assets and raising interest rates sooner and faster....what a relief
Ross Dre
Ross Dre Jan 11, 2022 8:02PM ET
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No words to say when it comes to Powell… just bold faced lies.
Rob Pira
Rob Pira Jan 11, 2022 7:52PM ET
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Forget Benzinga,, Investing, CNBC, blah blah blah. Your best insider info can be had in your local congress critter's office.
jj mm
jj mm Jan 11, 2022 5:28PM ET
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inflation is not transitory?
Trevor Roberts
LimitUp Jan 11, 2022 3:35PM ET
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Trade what it is not what you think it should be.
Mitchel Pioneer
Mitchel Pioneer Jan 11, 2022 3:14PM ET
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Plain and simple, this "market" is an absolute, unadulterated JOKE.
Tesla Bubble
Tesla Bubble Jan 11, 2022 3:10PM ET
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Friends of FED are buying while Powel speaks. Tommorow and the day after correction mode.
Keng He
Keng He Jan 11, 2022 3:01PM ET
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fed reserve chairman is ******
vince smith
vince smith Jan 11, 2022 2:53PM ET
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Powell you ever heard of a country called Zimbabwe that printed money. They actually hold the record for the largest denomination . Are you trying to take that record
Ron Love
Ron Love Jan 11, 2022 2:53PM ET
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Zimbabwe was never the world’s reserve currency.
vince smith
vince smith Jan 11, 2022 2:53PM ET
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you obviously don't know the history of Rhodesia and the Marxist take over.
Strat Afro
Strat Afro Jan 11, 2022 2:52PM ET
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He could have said: The economy is too fragile to raise rates. The debt burden is too heavy. Mr. President told me to avoid mentioning rising of rates until after the Election in November.. Let's go...
Chad RicherThanYou
Chad RicherThanYou Jan 11, 2022 2:47PM ET
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Im sure everything is fine guys. No financial crisis will ever hapoen lets just keep expanding the debt bubble and printing money. This time is different
Scott Keever
Scott Keever Jan 11, 2022 2:40PM ET
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paid public officials! I would like a refund!
Stan Smith
Stan Smith Jan 11, 2022 2:23PM ET
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You mean after Powell's pump
Antonio Velardo
Antonio Velardo Jan 11, 2022 9:47AM ET
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JP speaking 😱
Ronald Warren
Ronald Warren Jan 11, 2022 9:45AM ET
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Volatility =$$$ Best of luck today!!
Michael Montgomery
Michael Montgomery Jan 11, 2022 9:45AM ET
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Why trade volatility when you can trade safe and easy ....
Ron Love
Ron Love Jan 11, 2022 9:45AM ET
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Michael Montgomery Because many people fantisize about getting rich quick, only Boomers want to build wealth over the long-term the easy way. People got Lambos to buy bro.
V E SKYLINE
V E SKYLINE Jan 11, 2022 9:45AM ET
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what is safe to trade buddy? going long an overbought market?
Sebastien Muller
Sebastien Muller Jan 11, 2022 9:45AM ET
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you trade what is going to happen… compare FANG and other like Tesla share price on Dec 2021 and now. Don’t you think the market is overevaluated? What happened really economicaly for the last 1.5 year? Don’t you walk in the street?
 
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