Wall Street rose as Fed Chairman Powell diverges from monetary policy expectations

(Reuters) – Major indexes rose on Wall Street on Tuesday as Federal Reserve Chairman Jerome Powell stepped away from commenting on the outlook for monetary policy, with the focus shifting to the expected inflation reading due later this week.

Powell’s remarks, which provided no evidence of the Fed’s plans for future tightening, came as a huge relief after two other policymakers on Monday injected a note of caution on the interest rate outlook.

“(Powell) hasn’t disrupted the market in any way, and the fact that he’s stressing the need for political independence while tackling inflation, that’s definitely positive for markets,” said Peter Cardillo, chief market economist at Spartan Capital Securities. New York.

Traders are holding onto bets on a 25 basis point rate hike at the US central bank’s upcoming monetary policy meeting in February, with a final interest rate of just under 5% seen by June.

Markets had been hoping the Fed would soon signal the end of its rate-raising cycle after recent signs of a slowdown in the US economy, even as policymakers emphasized the central bank’s priority on controlling inflation.

“The Fed has a little bit more to tighten,” said David Russell, vice president of market intelligence at Trade Station Group, adding that Thursday’s inflation report will be crucial in shaping interest rate expectations.

The long-awaited Consumer Price Index (CPI) report from the US Department of Labor is expected to show some moderation in prices on an annual basis in December.

The Federal Reserve’s tight monetary policy to curb decades-high inflation hurt US stocks in 2022, with the three major indices posting their biggest annual drop since 2008.

Federal Reserve Governor Michelle Bowman said on Tuesday that the US central bank will have to raise interest rates further to combat high inflation.

Among the major S&P 500 sectors are retailers (.SPXRT) rose 0.8% and in the lead, while consumer discretionary stocks rose (.SPLRCD) rose 0.2%, with Amazon.com Inc (AMZN.O) Leading gains in both sub-indices.

healthcare stock (.SPXHC) It rose 0.5% and was also a big boost for the benchmark S&P 500.

At 11:59 a.m. ET, the Dow Jones Industrial Average (.DJI) It was up 28.41 points, or 0.08%, to 33,546.06, the Standard & Poor’s 500 (.SPX) The index rose 2.71 points, or 0.07%, to 3,894.80 points, then the Nasdaq Composite Index. (nineteenth) It rose 17.25 points, or 0.16%, to 10,652.90.

Broadcom Corporation (AVGO.O) fell 3.4% after a report that Apple (AAPL.O) It plans to replace the Broadcom chip from its hardware with an internal design in 2025.

Advance issues outnumber losers 1.17 to 1 on the NYSE and 1.62 to 1 on the Nasdaq.

The S&P hit a new 52-week high without a new low, while the Nasdaq posted 37 new highs and 20 new lows.

Additional reporting by Anika Biswas, Amruta Khandekar and Yohan M Cherian in Bengaluru; Editing by Chingini Ganguly and Shonnak Dasgupta

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