Published: Sat, July 13, 2019
Money | By Ethel Goodwin

Powell sends further signals of future rate cuts

Powell sends further signals of future rate cuts

US stocks edged higher on Thursday on improved bets of an interest rate cut following Fed chief Jerome Powell's dovish remarks, while healthcare stocks were mixed after the Trump administration withdrew a rule that would kill rebates. Fed Chairman Jerome Powell gave his bi-annual congressional testimony on Wednesday and Thursday, and his comments fueled hopes for a rate cut.

The Dow Jones Industrial Average .DJI rose 243.95 points, or 0.9%, to 27,332.03, the S&P 500 .SPX gained 13.86 points, or 0.46%, to 3,013.77 and the Nasdaq Composite .IXIC added 48.10 points, or 0.59%, to 8,244.14.

The euro, meanwhile, was up 0.1%against the dollar at $1.1256, even as expectations grew that the European Central Bank would loosen policy.

USA stocks ended higher on Wednesday and the S&P 500 briefly crossed the 3,000-point mark for the first time following Powell's remarks. S&P 500 e-minis were up 6.75 points, or 0.22%, and Nasdaq 100 e-minis were up 15.5 points, or 0.2%.

The Labor Department reported Thursday that so-called core CPI - the consumer price index excluding the volatile food and energy components - jumped 0.3% last month, the largest increase since January 2018, after four straight monthly gains of 0.1%.

This could be bullish for gold because it would raise concerns about the global economy and possibly put a 50-basis point rate cut back on the table. While Wall Street has anticipated a half-percent cut in the federal funds rate, it now appears more likely that the Fed will opt for a quarter percent cut in light of the stronger-than-expected June jobs report.

This in turn, hurt the super-long 30-year auction, also held late yesterday, besides, Fed Chair Jerome Powell's extremely dovish testimony in front of the House Financial Services Committee.

'It appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook, ' Powell said.

The United States and China agreed a ceasefire on raising tariffs on the sidelines of the G20 summit in Japan last month.

Powell said the Fed stands ready to "act as appropriate" to support record usa economic growth now under threat.

Powell said that the Fed pays no attention to commentary from US President Donald Trump and that he would not step down should Trump try to fire him.

Senator Richard Shelby of Alabama, often a critic of the central bank, also offered Powell his backing in the face of Trump's pressure.

Trump has long insisted lower rates will help the US economy grow even he prepares to try and win re-election in 2020.

While sentiment has recovered some in recent weeks, businesses around the country have been telling the Fed about their concerns about material prices and access to supplies, Powell told a Senate committee.

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