Fabrice Cabaud
Wall Street's three major averages ended Wednesday well off their session highs, but rebounded from their worst day since mid-February. Attention focused on Federal Reserve Chairman Jerome Powell's testimony before Congress, with the central bank chief largely reiterating that policymakers They were in no hurry to reduce interest rates.
The High-tech Nasdaq Composite (COMP.IND) rose 0.58% to close at 16,031.54 points, boosted by a post-earnings surge from cybersecurity company CrowdStrike (CRWD). The benchmark S&P 500 index (SP500) recovered the 5,100 point mark, rising 0.51% to remain at 5,104.76. The blue-chip Dow (dji) advanced 0.20% to conclude at 38,661.05 points.
Of the 11 S&P sectors, nine finished in green.
In prepared remarks ahead of testimony before the U.S. House Financial Services Committee, Powell said he believed the policy rate was “probably at its peak for this tightening cycle.” However, he also reiterated that policymakers wanted to gain “greater confidence” that inflation was approaching the Fed's 2% target before cutting rates was appropriate.
During testimony, Powell said the number of possible rate cuts this year would depend on the economy. He also wants to see “a little more data” before being confident enough that inflation is coming down.
“After a pretty painful day on March 5, March 6 ended up seeing a rally for the major market indices. This optimism came even despite comments from Federal Reserve Chairman Jerome Powell indicating that “While good progress had been made in fighting inflation, it could still be some time before interest rates are finally lowered,” Daniel Jones, leader of investment group Crude Value Insights, told Looking Alpha.
“He made it clear that we are probably at the peak of the interest rate hiking cycle and that cuts will likely begin later this year. But there are concerns about how temporary some of the recent improvements in inflation are,” Jones added. .
Market participants also received some indicators on the labor market on Wednesday. An ADP report showed the U.S. private sector added 140,000 jobs in February, less than the expected figure of 149,000. Additionally, the latest Job Openings and Labor Turnover Survey (JOLTS) showed that job openings decreased in January to 8.863 million from 8.889 million in December 2023. January's reading was lower than the consensus estimate of 8.9 millions.
Additionally, the JOLTS report showed that the churn rate fell to its lowest level since August 2020, falling slightly to 2.1% in January from 2.2% in December 2023.
Traders also received the Federal Reserve's latest Beige Book report, which showed economic activity in the central bank's eight districts overall increased slightly since early January.
Treasury yields were mixed on Wednesday, with longer-term maturities retreating and shorter-term maturities largely unchanged. The 30-year (US30Y) and 10-year (US10Y) yields fell 3 basis points each to 4.24% and 4.11%, respectively. The more rate-sensitive 2-year yield (US2Y) was stable at 4.56%.
See how Treasury yields have performed across the curve on the Seeking Alpha bonds page.
In active stocks, embattled lender New York Community Bancorp (NYCB) earlier fell as much as 47.2% in midday trading following a Wall Street Journal report that it was seeking a cash injection. Shortly after, the bank issued a press release saying it had raised more than $1 billion from a group of investors led by former U.S. Treasury Secretary Steven Mnuchin's firm. Shares of the lender ultimately ended up 8.1% after the announcement.
