U.S. stocks rose Wednesday, after prepared comments from Federal Reserve Chair Jerome Powell indicated interest rate cuts were coming later in the year.
At 09:45 ET (14:45 GMT), the Dow Jones Industrial Average climbed 140 points, or 0.4%, the S&P 500 rose 30 points, or 0.6%, and the NASDAQ Composite gained 140 points, or 0.9%.
Powell testimony in focus
Federal Reserve Chair Jerome Powell said in prepared remarks ahead of his testimony that the central bank expects to reduce its benchmark interest rate later this year.
Powell noted that inflation had “eased substantially” since hitting 40-year highs in 2022, but that policymakers still needed “greater confidence” in its continued decline before cutting rates.
Powell said that the Fed’s recent tightening cycle is “likely” at its peak, adding that, should the economy evolve as expected, “it will likely be appropriate to begin dialing back policy restraint at some point this year.”
Powell is speaking before Congress over the next two days, with his testimony following a series of warnings from Fed officials that sticky inflation will keep the central bank from considering any near-term reductions in interest rates.
Recent data also showed that the U.S. economy remained relatively resilient, giving the Fed more headroom to keep rates higher for longer. Nonfarm payrolls data due on Friday is set to provide more cues on that front.
Still, analysts expect the Fed to have enough cues on when to reduce rates by June, with expectations for a cut in that month remaining in play.
Traders see around a 70% chance of the first rate cut this year in June, as per CME Group’s (NASDAQ:CME) FedWatch tool.
Friday’s monthly jobs report will also offer some of these cues, but there is more employment data to study Wednesday, with the February ADP private sector jobs report showing an improvement from the previous month. The January JOLTS job openings data is also due.
CrowdStrike soars on strong quarterly earning, Nordstrom slides
Corporate earnings emerged Wednesday from the likes of Campbell Soup (NYSE:CPB) and Brown Forman (NYSE:BFb), while CrowdStrike (NASDAQ:CRWD) stock soared around 20% after the cybersecurity firm reported consensus-beating quarterly earnings and guidance.
These gains also pulled its peers, including Palo Alto Networks (NASDAQ:PANW), Zscaler (NASDAQ:ZS) and Fortinet (NASDAQ:FTNT) all gaining.
On the other hand, luxury department store chain Nordstrom (NYSE:JWN) fell 13% after its annual earnings forecast underwhelmed.
Crude rises on supply tightening
Oil prices rose Wednesday, rebounding after recent losses, helped by signs of supply tightening even with ongoing demand growth concerns in China and the U.S., the world’s two biggest crude consumers.
Saudi Arabia, the world’s biggest oil exporter, announced on Wednesday slightly higher prices for April crude sales to Asia, its biggest market.
This followed Sunday’s announcement that the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, will extend its output cuts of 2.2 million barrels per day until the end of the second quarter.
By 09:45 ET, the U.S. crude futures traded 1.9% higher at $79.67 a barrel, while the Brent contract climbed 1.3% to $83.12 a barrel.
The official U.S. government inventory report is due later in the session, and follows Tuesday’s report from the American Petroleum Institute industry group showing U.S. crude stocks rose by 423,00 barrels in the week ended March 1, much smaller than the expected increase of 2.1 million barrels.
Additionally, gold futures rose 0.3% to $2,152.35/oz, while EUR/USD traded 0.3% higher at 1.0886.
(Ambar Warrick contributed to this article.)
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