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Wall Street ends sharply higher, Powell assuages rate worries

Wall Street ended sharply higher on Wednesday after Federal Reserve Chair Jerome Powell signaled the central bank would likely raise interest rates less than some investors had feared.


Powell’s comments, in testimony to the U.S. House of Representatives Financial Services Committee, helped calm investors after Russia’s invasion of Ukraine sent markets into a tailspin.


Powell said he is inclined to support a 25 basis point rate hike in March, quelling some concerns about the potential for a more aggressive rate hike.


Traders now see a 95% probability of a 25 basis point hike in March.


All the 11 S&P 500 sector indexes advanced, with financials jumping after falling sharply so far this week. The banks index also rebounded after hitting its lowest level since September 2021 in the previous session.


Energy shares resumed their march higher, with the S&P 500 energy index rallying as Brent crude jumped to near eight-year highs after Western sanctions disrupted transport of commodities exported by Russia.


Russia’s week-old invasion has yet to achieve its aim of overthrowing Ukraine’s government. Ukrainians said they were battling on in the port of Kherson, the first sizeable city Russia claimed to have seized, while air strikes and bombardment caused further devastation in other cities.


“From day to day you go from the fear of escalation that could make things very bad to the hope that it will not really happen and that cooler heads will prevail, and that the economy is strong enough to get through this,” said Tom Martin, senior portfolio manager at GLOBALT Investments in Atlanta.


Apple ended higher after announcing a product launch for March 8, when it is expected to promote a low-cost version of its popular iPhone with 5G.


According to preliminary data, the S&P 500 gained 80.19 points, or 1.84%, to end at 4,385.62 points, while the Nasdaq Composite gained 217.26 points, or 1.61%, to 13,749.72. The Dow Jones Industrial Average rose 595.01 points, or 1.78%, to 33,892.33.


Data showed U.S. private employers hired more workers than expected in February as the labor market recovery gathered steam.


Nordstrom Inc surged after the department store chain forecast upbeat full-year revenue and profit. (Reporting by Devik Jain, Bansari Mayur Kamdar and Sabahatjahan Contractor in Bengaluru; Editing by Saumyadeb Chakrabarty and Grant McCool)

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