Stocks soared to record highs Wednesday after testimony from Federal Reserve Chair Jerome Powell made the case for easier monetary policy in the U.S.
The S&P 500 was up 3,000 for a little while. whereas the Nasdaq Composite and Dow Jones Industrial Average also reached all-time highs.
In testimony to the House Financial Services Committee, Powell said business investments in the U.S. have slowed notably and recently as uncertainties over the economic outlook linger.
Crosscurrents have merged said Powell. While many FOMC participants saw that the case for a somewhat more accommodative monetary policy has strengthened. Ever since, it has been based on incoming data and other developments. It appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to strengthen the U.S. economic outlook.
The major stock index pared gains as Powell answered questions from lawmakers, however. While answering questions from lawmakers, Powell reiterated that current trade conditions and muted economic activity have dampened the U.S. economy’s outlook. He noted, however, that the U.S. economy remains on solid ground.
The S&P 500 was shut back below 3,000, up 0.5% at 2,993.07. The Dow, meanwhile, jumped 76.71 points, or 0.3% at 26,860.20 after rallying nearly 200 points. The Nasdaq ended the day off its session high, but managed a record close at 8,202.53 as Amazon rose 1.5% to break above $2,000 per share.
Gold futures rallied more than 1% while short-term Treasury yields slipped.
Powell’s prepared testimony took a decidedly dovish turn with ‘uncertainties’ over trade and global growth since the June FOMC meeting characterized as having dimmed the outlook. By way of an update, the Chair just confirmed that things have gotten worse, said an analyst.
His testimony came after the Fed opened the door to cutting rates at its previous monetary policy meeting in June.
The Fed also released its minutes from the June policy meeting on Wednesday, which vowed the case for easier monetary policy has strengthened.
Traders have narrowed in a 100% probability of a Fed rate cut in July, as per the CME Group’s FedWatch tool. A stronger-than-expected June jobs report tempered expectations for a more aggressive easing.
There has been little in the statement to imply what this means past the July meeting, but one can infer that any further softening in the data past July will likely mean more action from the Fed at subsequent meetings.
In corporate news, Tesla shares was up more than 3% on news the company has told employees to prepare for an increase in production.
