Stocks rally as Fed chief Powell signals smaller rallies soon

Stocks rallied after Jerome Powell signaled the pace of monetary tightening is likely to slow in December, while also pointing to the need for more rate hikes to rein in inflation.

The S&P 500 has been set for a new milestone — its longest monthly streak since August 2021. Two-year yields — which are more sensitive to impending Fed moves — have erased. their growth. The dollar fell.

“The time to adjust the pace of rate hikes could come as soon as the December meeting,” Powell said in his speech. How much more rate hikes will we need to keep inflation under control and how long will it take to keep policy in check.”

Officials have signaled that they plan to raise the benchmark interest rate by 50 basis points at the last meeting of the year on December 13-14, after four consecutive 75 basis points hikes lifted rates. target range 3.75% to 4%.

Front Powell’s commentsFed Governor Lisa Cook said the central bank would be cautious about making smaller price hikes as it determines the increase needed to tame price gains.

Traders also looked for some economic reports, with key measures of US activity painting a mixed third-quarter picture. Job openings fell in October – a hopeful sign for the Fed as it seeks to rein in demand.

Figures ahead of Friday’s jobs report, are now expected to show employers added 200,000 workers to payrolls in November. Economists are expecting the unemployment rate to stay flat. 3.7% and average hourly earnings would be moderate.

“You’re not in a recession yet, but growth is slowing and you’re seeing the volatility of trying to fix,” said Matt Miskin, co-investment strategist at John Hancock Investment Management. price this. That is a challenge.” “It’s like a traffic light going red-green, red-green,” said at Bloomberg’s New York headquarters.

For Jeffrey Roach at LPL Financial, the labor market is probably still too tight for policymakers.

“The Fed will likely raise rates by 50 basis points in December and continue raising rates early next year before considering a pause,” Roach added.

Ronald Temple at Lazard Asset Management, notes that without further significant signs of slowing demand, traders look “excessively dovish” on the outlook for interest rates next year.

“The pivot is not quite what many people hope for,” he said.

Elsewhere, oil prices rose after government data showed US stockpiles fell by the most since 2019 while exports of crude and products rose to record highs.

This story was published from the wire dealer’s feed without text modification. Only the title has been changed.

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