Wall Street reacts to Fed Chair Jerome Powell's interest rate warning: Dow ... trends now
Wall Street's main indexes rose on Friday, breaking a three-week losing streak and shrugging off Federal Reserve Chair Jerome Powell's warning that further interest rates hikes could be needed to fight persistent inflation.
'We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective,' he told the Jackson Hole Economic Symposium in Wyoming.
After an early sell-off, the Dow Jones Industrial Average surged back into the green, closing up 247 points, or 0.73 percent. The S&P 500 rose 0.7 percent and the Nasdaq composite added 0.9 percent.
Analysts and policymakers remained split ahead of Powell's speech on the likelihood of a 12th hike to tackle inflation at the Fed's next rate-setting meeting, in September, and his speech did little to clear up the question.
Gus Faucher, chief economist at PNC Financial, said in a note that the speech was consistent with his baseline forecast of no further rate increases this year, adding that 'PNC expects a mild recession starting in early 2024 as the cumulative impact of tighter monetary policy leads to contraction in interest-rate sensitive sectors.'
Federal Reserve Chairman Jerome Powell takes a break outside of Jackson Lake Lodge during the Jackson Hole Economic Symposium in Grand Teton National Park on Friday
Traders work on the floor of the New York Stock Exchange Friday as Federal Reserve Chair Jerome Powell's speech shows on a television screen
'The overall tone of Chair Powell's Jackson Hole speech is one of cautious optimism coupled with clear determination to take no chances with the inflation outlook,' Pantheon Macroeconomics' Chief Economist Ian Shepherdson wrote in a note to clients.
'If that requires further tightening, in the Fed's view, then so be it. But nothing is guaranteed,' he added.
'Relative to market expectations, Powell perhaps delivered a bit more on the side of potential further rate cuts, and a bit less on the idea that average policy rates will be higher,' Citigroup economists wrote in an investor note after the speech.
Despite insisting the Fed could yet raise rates, Powell urged caution moving forward during his speech.
'As is often the case, we are
