Dow Surges 600 Points as Fed Chair Takes a More Dovish Stance on Interest Rates
U.S. stocks staged their strongest one-day rally in eight months after Fed Chairman Jerome Powell said said interest rates are close to neutral. Investors took the comments as a shift toward a more dovish stance on interest rates, pushing the Dow Jones Industrial Average up more than 600 points.
The Dow rose 617.70 points, or 2.5%, to 25,366.43, its highest close since November 16. The S&P 500 Index gained 61.61 points, or 2.3%, to 2,743.78. The Nasdaq Composite advanced 208.89, or 3%, to 7,291.59.
“Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy — that is, neither speeding up nor slowing down growth,” Powell said Wednesday in a speech delivered at the Economic Club of New York.
Powell’s comments appeared to reverse previous remarks he made in early October, when he said that rates were probably still a “long way” from the level the Fed considers to be neutral, signaling a willingness to pressure interest rates even higher.
The Fed’s policy has drawn vocal criticisms from President Trump, who said Tuesday that he’s “not even a little bit happy” with Powell’s performance and faulted him for the stock market’s recent declines. Trump has grown increasingly critical of Powell in recent months.
Oliver Pursche, chief market strategist at Bruderman Asset Management, told Reuters that Powell “gave the market, and presumably President Trump, exactly what he wanted, which was an admission that the previously proposed path of future rate hikes was probably too aggressive and opening to slowing the rate of hikes.”