U.S. Stocks Hold Onto Gains as Powell Reassures Investors
In a recent speech at Stanford University, Federal Reserve chair Jerome Powell acknowledged that recent data on inflation and jobs had come in stronger than expected. However, he reassured investors by stating that the data did not “materially change” the overall scenario of decelerating inflation.
Powell reiterated his message from last month, stating that policymakers were looking for more confidence that inflation was moving sustainably down to the central bank’s target of 2%. Despite higher inflation data over January and February, Powell emphasized that the overall picture remains one of solid growth, a strong labor market, and inflation moving down towards 2% on a sometimes bumpy path.
Market participants appeared to focus on Powell’s reassurances, leading to marginal gains in U.S. stocks. The tech-heavy Nasdaq Composite was up 0.49%, the S&P 500 had climbed 0.37%, and the Dow was higher by 0.22%.
Of the 11 S&P sectors, eight were in the green, indicating a positive market sentiment. The three major averages had initially overcome a negative open, with a report showing a slowdown in services activity offsetting earlier data reinforcing the labor market’s resilience.
Stock index futures had taken a hit before the opening bell, but equities moved sharply higher following the release of the Institute for Supply Management’s gauge of economic activity in the services sector. The services PMI moderated to 51.4% in March, while the prices index reflected its lowest reading since March 2020.
Looking at the fixed-income markets, Treasury yields pared back gains as traders snapped up bonds following Powell’s comments. Active stocks such as Ulta Beauty and Intel experienced significant movements, with Ulta Beauty slumping about 14% and Intel sliding more than 7%.
Overall, Powell’s reassurances and the positive market reaction indicate a sense of confidence among investors in the current economic outlook.
