Stocks rallied on Wall Street after the head of the Federal Reserve said the central bank could soon ease up on its aggressive pace of interest rate hikes aimed at taming inflation.
Wall Street closed out a solid November with a broad market rally Wednesday after the head of the Federal Reserve said the central bank could soon begin easing up on its aggressive interest rate increases aimed at taming inflation.
Fed Chair Jerome Powell, speaking at the Brookings Institution, reaffirmed that the central bank could begin moderating its pace of rate hikes as soon as December, when the policymaking committee is due to hold its next meeting.
“We have a risk management balance to strike,” Powell said. “And we think that slowing down (on rate hikes) at this point is a good way to balance the risks.”
Stocks roared higher following Powell’s midafternoon remarks. The S&P 500 rose 3.1%, snapping a three-day losing streak. The Dow Jones Industrial Average gained 2.2% and the Nasdaq composite climbed 4.4%.
The major indexes ended November with their second straight month of gains, though they remain in the red for the year.
Powell’s comments sent Treasury yields sharply lower. The yield on the 10-year Treasury dropped to 3.65% from 3.75% late Tuesday. The yield on the two-year note, which tends to track market expectations of future Fed action, fell to 4.34%. It was trading at 4.48% late Tuesday and had been as high as 4.53% shortly before Powell’s speech.
While citing some recent signs that inflation is cooling, Powell stressed that the Fed will push rates higher than previously expected and keep them there for an extended period to ensure inflation comes down sufficiently.
“History cautions strongly against prematurely loosening policy,” Powell said. “We will stay the course until the job is done.
