Wall Street advances on Powell’s dovish signals

Wall Street is rejoicing on the latest comments by Jerome Powell. The S&P 500 has gained the first day in four following significantly dovish comments by Fed’s Jerome Powell confirming that the US Fed will slow the pace of its hawkish rate-hiking that impacted financial and exchange markets.

The broad index added 1% following Powell’s comments. The Dow Jones Industrial Average was up 157 points, or 0.5%. Meanwhile, the tech-heavy Nasdaq Composite jumped 1.1%.

“It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” Powell said in a speech at the Brookings Institution, adding that “the time for moderating the pace of rate increases may come as soon as the December meeting.”

But overall stock gains were muted as Powell also warned that Fed could maintain its previously adopted restrictive policy for a long time before it ends its endeavours and measures that are meant to to combat inflation.

“Despite some promising developments, we have a long way to go in restoring price stability,” Powell said.

Powell’s comments cemented optimism among investors and traders that the US central bank will decide on a smaller 0.5 percentage point rate hike at its next meeting after the previous four successive 0.75 percentage point hikes to tame hot inflation. Any signal of a slower-paced tightening is sufficient reason why markets can edge higher.

The 10-year Treasury yield eased a bit on the news. Wednesday’s jumps add to gains already achieved by the major indexes over the positive month of November. The Dow and S&P 500 are both set to end the month up more than 3%, while the Nasdaq Composite is on track to gain 1.5%.