Powell’s Speech Boosts Dow Jones and S&P 500 Indexes to New Records – O Journal Economics

Wall Street ended the last session of the week with two major indices, the Dow Jones and Standard & Poor’s 500, reaching new highs after Federal Reserve Chairman Jerome Powell’s speech that eased investor concerns about a possible reference rate hike in the United States.

The Dow Jones rose 233 points to close at 35446.46, after reaching the highest levels during the session. The S/P 500 also walked on record territory, closing at 4,509.46 points, or 0.88% higher. The Nasdaq rose 1.23% to close at 15,129.5 points.

Speaking at the opening of the Federal Reserve’s annual Kansas City symposium in Jackson Hole, Wyoming, Jerome Powell revealed that the phase-out of the asset purchase program is expected to begin this year after the economy has made “significant progress.” Demanded by the monetary authority, in the area of ​​inflation.

However, the Federal Reserve Chairman stressed, on the one hand, that higher interest rates is still a long way off and will force “more demanding tests” on different dimensions of the economy, reminding that the labor market still has a long way to go.

In the inflation chapter, Powell reiterated that the current rise in the CPI would prove to be transient, and provided a detailed explanation of the reasons why he defended this view, including a lack of openness to inflationary pressures in various sectors of the economy or keeping long-term inflation expectations close. from a 2% target.

Markets reacted enthusiastically to the speech, as pro-cyclical bonds benefited from the prospects of maintaining monetary support for the recovery. The energy sector, in particular, saw notable gains backed by market expectations of possible disruptions in oil supplies in the wake of Tropical Storm Ida.

The banking sector also advanced in Friday’s session, with Bank of America gaining 1.02%, Goldman Sachs 1.69% and Morgan Stanley 1.45%. Major technology companies also closed in the green, with gains between 0.69% for Apple and 2.26% for Facebook.