New York: After a bumpy trading session on Tuesday, U.S. stocks ended higher as investors processed remarks from Federal Reserve Chair Jerome Powell over how long the central bank may need to contain inflation.
According to Powell, 2023 should see “substantial decreases in inflation.”
His remarks fueled investor expectations for less interventionist monetary policy, which were dashed by a positive U.S. jobs data last Friday.
In reference to the January nonfarm payrolls report, Powell remarked at the Economic Club of Washington, “We didn’t expect it to be this strong,” but it “shows why we think this will be a process that takes quite a bit of time.”
Powell believes there is a good route forward, but that rates won’t be dropped anytime soon.
Wall Street’s main indexes fluctuated wildly during and after Powell’s remarks, and analysts said volatility is unlikely to dissipate soon.
“Until we see softening and inflation throughout the economy and throughout the globe, it’s going to be hard to push the markets up in a decisive fashion,” said Carol Schleif, deputy chief investment officer at BMO Family Office.
The tech-heavy Nasdaq rallied and the S&P 500 also got a boost from Microsoft Corp. The company’s shares rose as it unveiled an integration of ChatGPT, a chatbot from OpenAI, into its products.
