Dow ends up 2.1% as Fed chief signals openness to rate cut

Published 04.06.2019 23:46
Updated 05.06.2019 00:35
Traders on the floor of the New York Stock Exchange May 31,2019 in New York. (AFP Photo)
Traders on the floor of the New York Stock Exchange May 31,2019 in New York. (AFP Photo)

Wall Street stocks rocketed higher Tuesday, shrugging off recent weakness as the U.S. Federal Reserve chief signaled greater openness to cutting interest rates.

After stocks opened higher, the comments from Fed Chair Jerome Powell gave the market another upward push, enabling investors to overlook for now lingering angst over trade tensions and slowing global growth.

The Dow Jones Industrial Average finished up 2.1%, or more than 500 points, at 25,332.18.

The broad-based S&P 500 also jumped 2.1% to 2,803.27, while the tech-rich Nasdaq Composite Index surged 2.7% to 7,527.12.

During an appearance in Chicago, Powell appeared to open the door to a possible cut in benchmark interest rates.

"We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion," Powell said.

That marked a shift from recent Powell statements. The Fed has kept interest rates unchanged in 2019 after a series of interest rate hikes in 2018 and prior years.

"Until very recently, everyone at the Fed has been comfortable with where they were," said Art Hogan, chief market strategist at National Securities.

"This is the Fed's acknowledgment of a where the market has gotten and what could happen if we get into an elongated trade war with China."

Powell's remarks were not the only catalyst to Tuesday's rally.

Analysts said the gains also reflected somewhat more favorable trade news, with a Chinese official supporting continued trade negotiations and congressional Republicans signaling significant opposition to the White House's plan to place tariffs on Mexican goods.

Almost all of the companies in the Dow gained, with especially large advances by Apple, Nike and Dow, all of which won at least three percent.

Bank of America jumped 4.7% and Citigroup 5.2%, rallying with other large banks as U.S. Treasury yields rose and the bond market cooled.

Mattel soared 11.7% as it unveiled an international licensing agreement with Sanrio to market "Hello Kitty" and other popular characters on toys, baby gear and other items.

Shares of large technology companies recovered after suffering deep declines on Monday on reports of stepped-up U.S. antitrust enforcement. Amazon gained 2.2%, Facebook 2.0% and Google parent Alphabet 1.6%.

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