Stocks jump as Powell reaffirms dovish stance

2:06 PM July 10, 2019

Summary:

  • Equities receive boost from Fed chair

  • Powell strongly hints at imminent rate cuts

  • S&P500 back at 2995; turns green on the day

 

There was a high level of expectation ahead of Jerome Powell’s appearance on Capitol Hill this afternoon, but the event itself may contain little by the way of surprises after a pre-released text of the Fed chair’s opening remarks has caused a significant market reaction. With markets already discounting a 100% chance of a Fed rate cut at the end of this month, the bar was pretty high for Powell, but he has seemingly repeated the trick from the June FED decision in meeting it and in doing so sent stocks soaring once more.

US stocks have jumped on the news with the S&P500 rallying almost 20 points since and closing back in on the 3000 handle. Source: xStation 

 

Selected comments from the pre-released text are as follows:

  • Uncertainties since June FOMC continued to dim outlook

  • Uncertainties and concerns about the global economy continue to weigh on US economic outlook 

  • Fed will act as appropriate to sustain US economic growth 

  • There is a risk weak inflation will be even more persistent than Fed currently anticipates

The reaction to this can be seen across several markets with the US dollar falling lower across the board while US bonds and Gold have spiked along with equities. The US 10-year bond (TNOTE) has moved above the 127 handle and could be looking to make a comparable move to the one seen last month after the Fed decision. Source: xStation  

The S&P500 remains in breakout territory above 2963 and if the market can move above recent highs of 3004 then further gains could lie ahead. Source: xStation 

 

 

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