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US stocks rose Friday as markets brushed off Powell’s warnings of more possible Fed tightening.
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The Fed chief said the central bank could hike interest rates further “if appropriate” to tame inflation.
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Investors seemed to ignore the warning, pushing to the Dow up almost 250 points during the session.
US stocks ended higher on Friday as investors brushed off Jerome Powell’s speech at the Jackson Hole Symposium, where the Fed Chair warned more central bank policy tightening could be in order.
At the event, Powell reiterated that prices were still above the Fed’s 2% inflation target, though central bankers have made good progress cooling down inflation down over the last year. Prices accelerated just 3.3% in July, down from the a peak of 9.1% recorded in June 2022.
“It is the Fed’s job to bring inflation down to our 2% goal, and we will do so,” Powell said in his speech Friday morning, adding that the central bank would continue to assess inflation’s descent and raise rates “if appropriate.”
Still, expectations of the Fed’s future policy moves remained about the same, though investors slightly raised their bets that the central bank will hike rates another 25 basis-points at its November policy meeting. Such a rate move has been priced in with a 46% probability, according to the CME FedWatch tool, up from a 42% probability yesterday.
“Powell said little to change market expectations in the very short-term,” CIBC Private Wealth’s Gary Pzegeo said in a statement on Friday. “Beyond September, markets may have to adjust the rate outlook higher, particularly if the recent run of faster than expected growth continues to play out.”
Here’s where US indexes stood at the 4:00 p.m. closing bell on Friday:
Here’s what else happened today:
In commodities, bonds, and crypto:
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West Texas Intermediate crude oil rose 1.32% to $80.09 a barrel. Brent, the international benchmark, rose 1.7% to $84.80 a barrel.
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Gold slipped 0.28% to $1,942.60 per ounce.
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The yield on the 10-year Treasury yield was nearly flat at 4.239%.
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Bitcoin inched lower 0.01% to $26,015.
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