Stocks posted large gains on Wednesday after Federal Reserve Chairman Jerome Powell confirmed that the central bank would slow the pace of its aggressive rate hike campaign that has weighed on markets.
The Dow Jones Industrial Average closed up 737.24 points, or 2.18%, at 34,589.77. Meanwhile, the tech-heavy Nasdaq Composite jumped 4.41% to 11,468.00. The S&P 500 added 3.09% to 4,080.11.
“It makes sense to moderate the pace of our rate hikes as we approach the level of restraint that will be sufficient to bring inflation down,” Powell said. said in a speech at the Brookings Institution in WashingtonDC “The time to moderate the pace of rate hikes could come as early as the December meeting.”
Powell warned that the Fed could maintain a restrictive policy for a long time before ending its fight against inflation.
“Despite some promising developments, we still have a long way to go to restore price stability,” Powell said.
Powell’s comments bolstered growing optimism among some investors that the Fed will make a half-percentage-point lower rate hike at its next meeting on Dec. 14 after four consecutive three-quarter-point increases. to control high inflation.
“Investors are looking for that rock of certainty — something to hang their hats on for greater predictability of where the Fed is heading with interest rates,” said Greg Bassuk, CEO of AXS Investments. “The message that the pace of rate increases can start to slow as early as December was that rock.”
The 10-year Treasury yield fell slightly on the news.
Wednesday’s rally provided an 11th hour boost to a winning November. The Dow Jones and S&P 500 ended the month up about 5.7% and about 5.4%, respectively, while the Nasdaq Composite gained nearly 4.4%.