NEW YORK (NerdWallet) – Stocks moved higher Wednesday as Wall Street welcomed new signals from the Federal Reserve that the central bank is ready to cut interest rates for the first time in a decade.
Fed Chairman Jerome Powell said that many Fed officials believe a weakening global economy and rising trade tensions have strengthened the case for a rate cut.
Powell’s remarks, which he delivered as part of his semi-annual monetary report to Congress, allayed investors’ concerns that an unexpectedly strong U.S. jobs report on Friday might give the Fed reason to stay put on interest rates.
The market rallied through much of June after the Fed first signaled that it might cut rates if necessary to shore up the U.S. economy.
Wednesday’s rally briefly sent the S&P 500 index into record territory before losing some of its momentum by midmorning.
Technology companies accounted for much of the market’s gains. Micron Technology climbed 4.2% and Western Digital rose 3%. Communications services stocks and consumer goods makers also rose. Take-Two Interactive added 1.2% and Procter & Gamble picked up 1%.
Energy stocks also headed higher as the price of U.S. crude oil climbed 2.8%. Chevron rose 1.2%.
Bond prices rose sharply, sending the yield in the 10-year Treasury note down to 2.04% from 2.10% shortly before Powell’s remarks were released at 8:30 a.m. Eastern Time.
The drop in yields pulled bank shares lower. When bond yields decline they drive the interest rates that lenders charge for mortgages and other loans lower. Citizens Financial Group dropped 2.1%.
Industrials and materials stocks also lagged the market. Deere & Co. slid 1.5% and Corteva lost 1.5%.
KEEPING SCORE: The S&P 500 index rose 0.3% as of 11:30 a.m. Eastern time. The benchmark index briefly moved above 3,000 for the first time.
The Dow Jones Industrial Average gained 51 points, or 0.2%, to 26,835. The Nasdaq added 0.4% and the Russell 2000 index of smaller company stocks gave up an early gain, sliding 0.2%.
Major stock indexes in Europe were mixed.
SIGNALING A RATE CUT: Powell’s statement kicked off two days of testimony, first before the House Financial Services Committee and then Thursday before the Senate Banking Committee.
His testimony comes at a time when the U.S. economic landscape is mixed. While the job market appears resilient and consumer spending and home sales look solid, the economy is likely slowing. And the U.S. trade disputes have added uncertainty to the economic outlook.
In his prepared statement, Powell said that since Fed officials met last month, “uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.” Meanwhile, inflation has fallen farther from the Fed’s target.
The Fed’s benchmark rate currently stands in a range of 2.25% to 2.5% after the central bank boosted rates four times last year. Many investors have put the odds of a rate cut this month at 100%.
SOLID QUARTER: Helen of Troy jumped 12.4% after reporting fiscal first-quarter results that topped Wall Street’s forecasts. The company’s brands include Hydro Flask, Oxo, Vicks and Revlon.
SLICK RESULTS: Shares in WD-40 climbed 10.7% after the seller of lubricants delivered fiscal third-quarter earnings and revenue that exceeded analysts’ expectations.
NOT A GOOD LOOK: Levi Strauss slumped 11.8% after the jeans maker’s latest quarterly report card showed its profit margins fell due to higher costs. That overshadowed the company’s fiscal second-quarter results, which came in ahead of Wall Street’s forecasts.
By AP reporter Alex Veiga
