Wall Street closed higher after Powell’s testimony eased investor concerns

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  • Powell says the economy can resist Fed tightening, Omicron
  • IBM down after UBS downgrade to “sell”
  • Las Vegas Sands skips JPM update
  • Rising Indices: Dow 0.51%, S&P 0.92%, Nasdaq 1.41%

11 Jan (Reuters) – US stock indices gained ground Tuesday with the Nasdaq leading the way as investors were relieved that Federal Reserve Chairman Jerome Powell’s testimony to Congress came with no major surprises.

Federal Reserve Chairman Jerome Powell, in a Congressional hearing that indicated his likely confirmation for a second term in the workplace, said the US central bank was determined to ensure that high inflation does not “entrench itself. “.

But he added that rather than slowing employment growth, the Fed’s tightening plans that include higher interest rates and a reduction in its holdings of assets were needed to maintain economic expansion. to know more

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After losing just 1% earlier in the day, the interest rate sensitive tech sector (.SPLRCT) rebounded taking the broader indices with it. The tech-rich Nasdaq closed up 1.4%, marking its largest daily gain so far this year.

Powell’s comments likely reassured investors that the Fed would not prioritize reducing inflation above all else, including employment, said Shawn Cruz, senior trader strategy manager at TD Ameritrade in Chicago. .

“The initial concern was that the Fed would disrupt the pace of the recovery,” Cruz said. But the investor’s assumption from Tuesday’s testimony was that it “will not just try to crush inflation” without considering “the other effects it could have on the economy.”

Investors had been selling stocks since January 5, when minutes from the December meeting showed Fed officials discussing how the “very tight” labor market and steady inflation could call for an earlier-than-expected interest rate hike and a reduction in the Fed’s overall assets holdings as a second brake on the economy. to know more

While investors will look forward to the inflation data coming out Wednesday, Cruz notes that they are already prepared for a high number with consensus forecasts for a 7% year-over-year rise for the consumer price index (CPI).

According to economists interviewed by Reuters, the core CPI, which excludes food and energy prices, is seen to rise by 5.4%.

The Dow Jones Industrial Average (.DJI) rose 183.15 points, or 0.51%, to 36,252.02, the S&P 500 (.SPX) gained 42.78 points, or 0.92%, to 4,713, 07 and the Nasdaq Composite (.IXIC) added 210.62 points, or 1.41%, to 15,153.45.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, USA, January 10, 2022. REUTERS / Brendan McDermid

Eight of the 11 major sectors of the S&P 500 increased, with high-growth sectors such as technology, consumer discretionary (.SPLRCD) and communications services (.SPLRCL) contributing the most to the S&P earnings. The biggest percentage gain was energy (.SPNY), which closed 3.4% higher, thanks to the rise in crude oil futures. OR

The S&P took a five-day slump, while the Nasdaq (.IXIC) added Monday’s small gain. The week began with an afternoon return that strategists attributed to an influx of retail investors looking for bargains after a sell-off session earlier in the session. to know more

Marko Kolanovic, chief global markets strategist at JPMorgan Chase & Co, released a research note on Monday calling the recent withdrawal of riskier assets “probably overstated” and calling it a buying opportunity. [nL1N2TQ2DY

Also on investor watchlists for this week is the unofficial start of the fourth-quarter earnings season on Friday, with big banks expected to show an uptick in quarterly core revenue thanks to new lending and firming Treasury yields. read more

Vaccine maker Moderna (MRNA.O) finished down 5.3% after rising more than 9% on Monday. Pfizer’s (PFE.N) vaccine partner BioNTech also fell 6.2%. The World Health Organization said more research is needed to find out if existing COVID-19 vaccines provide adequate protection against the Omicron variant. read more

Pfizer closed up 0.8%. It said it was reducing its U.S. sales staff jobs as it expects doctors and other healthcare providers to want fewer face-to-face sales meetings after the COVID-19 pandemic ends. read more

Casino operator Las Vegas Sands Corp rose 6.6% after J.P. Morgan upgraded the stock to a “overweight” rating.

International Business Machines (IBM.N) fell 1.6% after UBS downgraded the stock to “sell” and slashed its price target.

Advancing issues outnumbered declining ones on the NYSE by a 3.05-to-1 ratio; on Nasdaq, a 2.23-to-1 ratio favored advancers.

The S&P 500 posted 28 new 52-week highs and no new lows; the Nasdaq Composite recorded 42 new highs and 108 new lows.

On U.S. exchanges 10.58 billion shares changed hands compared with the 10.55 billion average for the last 20 sessions.

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Additional reporting by Bansari Mayur Kamdar and Shreyashi Sanyal in Bengaluru; Editing by Saumyadeb Chakrabarty, Maju Samuel and Aurora Ellis

Our Standards: The Thomson Reuters Trust Principles.

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