Stocks closed higher on Wall Street after the head of the Federal Reserve signaled last week’s stunningly strong jobs report isn’t likely to change where interest rates are heading on its own, as some investors had feared. The S&P 500 rose 52.92 points, or 1.3%, to 4,164. The Dow Jones Industrial Average rose 265.67 points, or 0.8%, to 34,156.69. The Nasdaq composite rose 226.34 points, or 1.9%, to 12,113.79. Comments from Fed chief Jerome Powell sent stocks from losses to big gains and then back and forth a couple times. High inflation and how high the Fed will take interest rates to fight it have been at the center of Wall Street’s wild movements for more than a year.
Powell said on Tuesday that progress is being made on inflation, though a long battle remains. That echoed similar comments he made last week, following the Fed's latest increase to interest rates. But that was before a jolting jobs report on Friday showed US employers added a third of a million more jobs than expected last month. Powell said Tuesday at the Economic Club of Washington, DC, that the market’s big moves since the jobs report have gotten it closer to in sync with the Fed’s thinking, the AP reports. Not only did stocks fall in the days after the report, Wall Street raised its forecast for how high the Fed will take rates by the summer.
Despite all the market's recent moves, stock prices are still up a healthy amount since the start of the year. The S&P 500 is up nearly 8%. Much of that was due to easing worries the economy may fall into a severe recession, a scenario described in markets as a "hard landing." "If I had to take a camp today, it would be in the soft-landing one, if only because of the strength of the labor market," said Ross Mayfield, investment strategy analyst at Baird. He said he sees a "slowdown or maybe a soft recession, but that's what I think a 'soft landing' means now" for the economy. "The problem is that with the market rally to start the year, you’ve got that scenario priced in almost," he said. "There are still risks to the downside."
A relatively lackluster earnings reporting season on Wall Street is also rolling on. Carrier Global dropped 3.8% despite matching analysts’ expectations for profits in the latest quarter. It also gave a forecast for revenue this upcoming year that was slightly above Wall Street’s expectations. Analysts pointed to a deceleration in orders. On the winning end was DuPont, which climbed 7.5% after reporting stronger profit for the latest quarter than analysts expected. Activision Blizzard gained 5.6% after the video-game company reported stronger revenue and profit for its latest quarter than expected. A 4.2% move higher for Microsoft also helped lift the market. The company said it's using ChatGPT-like technology in its Bing search engine.
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