Fed chief Powell reiterated that inflation is still above the Fed’s 2% target. AP Photo/Susan Walsh, File
US stocks rose on Friday as markets ignored Powell’s warnings of further tightening by the Fed.
The Fed chief said the central bank could raise interest rates further “if appropriate” to tame inflation.
Investors appeared to ignore the warning, sending the Dow up nearly 250 points during the session.
US stocks closed higher on Friday as investors ignored Jerome Powell’s speech at the Jackson Hole symposium, where the Fed chairman warned that more central bank policy tightening could happen.
At the event, Powell reiterated that prices are still well above the Fed’s 2% inflation target, although central bankers have made good progress in reducing inflation over the past year. Prices rose only 3.3% in July, which is lower than the peak of 9.1% recorded in June 2022.
“It’s the Fed’s job to bring inflation down to our 2% target, and we will do that,” Powell said in his Friday morning speech. He said the central bank will continue to assess the extent of inflation and raise rates “if appropriate”.
Still, expectations of the Fed’s future policy moves remained roughly the same, though investors slightly raised their bets that the central bank will hike rates by 25 basis points at its November policy meeting. Such a rate move has been priced in with a 46% probability, up from 42% probability yesterday, according to the CME Fedwatch tool.
“Powell has had little to say about changes in market expectations in the near term,” Gary Pageggio of CIBC Private Wealth said in a statement Friday. “After September, markets may have to further adjust the rate outlook, especially if the recent faster-than-expected growth continues.”
Here are the US indices at the closing bell at 4:00 PM on Friday:
Here’s what else happened today:
In commodities, bonds and crypto:
West Texas Intermediate crude oil rose 1.32% to $80.09 a barrel. International benchmark Brent rose 1.7% to $84.80 a barrel.
Gold slipped 0.28% to $1,942.60 an ounce.
The yield on the 10-year Treasury yield was nearly stable at 4.239%.
Bitcoin fell 0.01% to $26,015.
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