Powell Meeting On? Depends on Who You Ask

08 January, 2019, 00:19 | Author: Stuart Potter
  • Fed's Powell Pledges Patience, Sensitivity to Risks in Markets

USA stocks have tumbled since October as investors anxious that the economy might slow down dramatically because of challenges including the trade dispute and rising interest rates.

The Dow finished up 3.3 percent, or almost 750 points, to end the week at 23,433.16, more than making up for the 2.8 percent slide on Thursday amid worries over slowing growth.

"Nothing's been scheduled, I would say that meetings between presidents and Fed chairs do happen", he told moderator and New York Times reporter Neil Irwin. The trade tensions have dragged on for almost a year and uncertainty over their outcome has dragged down stock indexes around the world.

Stocks opened the day higher after the Labor Department reported that nonfarm payrolls in the U.S. increased in December by 312,000, well above consensus estimates of 177,000 jobs created. The Fed has worked to gradually increase interest rates over the past couple years, unnerving investors who anxious the Fed could bring about a recession by hiking rates too quickly.

Dean Popplewell, market analyst at Forex group Oanda, noted that the ADP private sector jobs measure that came out yesterday showed a 271,000 surge in jobs, providing further evidence that the U.S economy remains in "healthy shape".

"When you get such a strong jobs report and a Fed chairman saying he's patient and flexible it sends a message to the markets that we're moving in the right direction", said Robert Pavlik, chief investment strategist, senior portfolio manager at SlateStone Wealth LLC in NY.

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The Fed chief stressed that the economy remained on track and that the job market was quite strong.

In the cash market, the benchmark S&P 500 Index settled at 2531.94, up 84.05 or +3.17%. The Russell 2000 index surged 49.92 points, or 3.8 per cent, to 1,380.75. The Nasdaq composite jumped 275.35 points, or 4.3 per cent, to 6,738.86. Last month, President Donald Trump and Chinese leader Xi Jinping agreed to 90-day ceasefire as a step toward defusing tensions. The Dow rose 3.3 per cent to 23,433.16 after gaining 832 during the afternoon. Do we need to move more, faster?

Stocks in the USA were on track to regain most of Thursday's losses.

Bond prices also changed course and moved sharply lower.

Riskier stocks led the rally, including tech companies that have gotten killed lately: Facebook (FB) rose 5%, Apple (AAPL) was up 4% after its worst day in six years. That helps banks, as higher interest rates allow them to make bigger profits on mortgages and other loans. U.S. West Texas Intermediate (WTI) crude futures increased 87 cents to settle at $47.96 a barrel, a 1.85 percent gain. Brent crude, used to price global oils, was up 2.3 per cent to $57.83 per barrel in London. Wages and labour force participation both rose, signalling sustained economic strength. The euro rose to $1.14 from $1.1391.

GBP/USD: The pound strengthened against greenback on Friday, as a weaker dollar and optimism for a Brexit deal ahead of Brexit vote supported British pound.

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