Wall Street Finishes at Record Highs, Powell’s Remarks Boost Rate Cut Probability to 100%


FLASH: Stocks gained as investors interpret Fed Chairman Powell’s testimony before the House indicated a rate cut soon.

Wednesday, US stocks finished higher on hopes of an interest rate cut later this month were signaled by Fed Chairman Powell’s commen to Congress that the central bank would “act as appropriate” to sustain record US growth.

There was already a 100% implied likelihood for a 25-bpts cut in the fed funds rate according to the fed funds futures market. The probability for a 50-bpts cut, however, did increase to 26.6% from 3.3% Tuesday. Contributing to the recalculation was Fed Chairman Powell saying that the stronger-than-expected June employment report did not alter the Fed’s mindset, contrary to the market’s thinking last Friday. 

The Dovish tone helped 8 of the 11 S&P 500 sectors finish higher.

The S&P 500 energy sector (+1.4%) led the advance, buoyed by higher Crude Oil prices ($60.48/bbl, +$2.69, +4.7%) on Bullish inventory data and supply disruption in the Gulf of Mexico. The financials (-0.5%), industrials (-0.3%), and materials (-0.2%) sectors were the only sectors that finished lower. 

The Fed also released the minutes from the June FOMC meeting, although market reaction was muted as Fed Chairman Powell’s comments provided a more updated view on monetary policy. Mr. Powell will head back to Congress tomorrow to conclude his testimony before the Senate.

Wednesday, the major US stock market indexes finished at: DJIA +76.71 at 26860.29, NAS Comp +60.80 at 8202.53, S&P 500 +13.44 at 2993.07

Volume: Trade on the NYSE came in at 701-M/shares exchanged

  • NAS Comp +23.6% YTD
  • S&P 500 +19.4% YTD
  • Russell 2000 +16.1% YTD
  • DJIA +15.1% YTD

HeffX-LTN’s overall technical outlook for the US major stock market indexes is Bullish to Very Bullish in here.

Stay tune…