Tech leads way to Wall Street rebound as Powell promises steady hand
By Pete Schroeder
WASHINGTON (Reuters) -Wall Street rebounded Tuesday as Federal Reserve Chairman Jerome Powell vowed not to raise rates too quickly as the dollar and oil gave up earlier gains.
Led by the tech-heavy Nasdaq Composite, Wall Street closed Tuesday higher, bouncing back from a sell-off set off last week by a Fed policy update that suggested officials believed rates would rise more quickly to counter rising inflation.
The Nasdaq closed at another record high, as top-shelf tech companies resumed their growth trajectories.
The Dow Jones Industrial Average rose 68.61 points, or 0.2% and the S&P 500 gained 21.65 points, or 0.51%. to 4,246.44 and the Nasdaq Composite added 111.79 points, or 0.79 percent, to 14,253.27.
The MSCI world equity index, which tracks shares in 45 nations, rose 4.4 points or 0.62%.
"I really think there's a realization that this is a ripe environment: rates are still low and for stock investors, this hits a 'just right' tone," said Patrick Leary, chief market strategist at Incapital. "The market is concerned about rising inflation numbers and was getting more unnerved as the Fed dismissed them until last week’s meeting."
Testifying before Congress, Powell vowed that the Fed will not raise rates out of fear of potential rising inflation, and instead will prioritize a "broad and inclusive" recovery of the job market. He said recent price increases do not suggest higher rates are needed, and instead can be attributed to categories directly impacted by economic reopening.
"After the FOMC took the wind out of the reflation trade at the end of last week, that’s started to reverse over the last two days. It seems last week’s price action went too far," said Stephanie Roth, senior markets economist for J.P. Morgan Private Bank.
Powell's remarks pushed yields on benchmark 10-year Treasuries lower, dipping to yield 1.4649% after clearing 1.5% earlier in the day.
The dollar also dipped as Powell spoke, with the dollar index falling 0.20% to 91.733. It is holding below a two-month high of 92.408 reached on Friday.
Oil slid slightly after Brent rose above $75 a barrel for the first time in over two years, as OPEC+ discussed raising oil production.
Brent crude futures settled down 9 cents to $74.81 a barrel after hitting a session high of $75.30 a barrel, the strongest since April 25, 2019.
U.S. West Texas Intermediate (WTI) crude fell 60 cents, or 0.8%, to $73.06 a barrel.
Bitcoin began making a comeback of sorts, climbing back above $30,000 after hitting lows not seen since January. The cryptocurrency last traded at $32,831, but has nearly halved in value over the last three months. Bitcoin and other cryptocurrencies came in for heavy selling on Monday, hurt by a tightening crackdown on trading and mining in China.
Spot gold prices fell $4.8691 or 0.27%, to $1,778.08 an ounce.
(Reporting Pete Schroeder in Washington; Editing by Dan Grebler and Lisa Shumaker)
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