Wall Street ends higher, Powell comments shun interest rate policy

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  • Investors are waiting for CPI numbers on Thursday
  • US earnings season begins this week
  • Jefferies shares soar after results
  • Indices: Dow 0.6% higher, S&P 500 0.7% higher, Nasdaq 1% higher

NEW YORK, Jan. 10 (Reuters) – US stocks ended solidly higher on Tuesday, led by a 1% gain on the Nasdaq following relief that Federal Reserve Chairman Jerome Powell refrained from commenting in a speech on the interest rate policy.

In his first public appearance of the year, said Powell at a forum sponsored by the Swedish central bank that the independence of the Fed is essential to fight inflation.

Recent comments from other Fed officials support the view that the central bank must remain aggressive in raising interest rates to control inflation. Fed Governor Michelle Bowman said on Tuesday that the bank will have to raise interest rates further to combat high inflation.

“Everyone is hanging on every word from the Fed,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. Powell “didn’t really say anything” about the policy, he added.

Investors eagerly awaited Thursday’s US consumer price index report, which is expected to show some moderation in year-over-year prices in December.

Traders are betting on a rate hike of 25 basis points at the upcoming Fed policy meeting in February.

“There are some indications that inflation is slowing significantly. What investors are really looking for is a gap in key inflation data that could likely catch the attention of the Fed,” Ghriskey said.

Amazon.com Inc. (AMZN.O) stocks were up 2.9%, giving the Nasdaq and S&P 500 their biggest boosts.

The Dow Jones Industrial Average (.DJI) increased by 186.45 points, or 0.56%, to 33,704.1; the S&P 500 (.SPX) earned 27.16 points, or 0.70%, at 3,919.25; and the Nasdaq Composite (.IXIC) added 106.98 points, or 1.01%, to 10,742.63.

Traders work on the trading floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 5, 2023. REUTERS/Andrew Kelly

Shares Microsoft Corp (MSFT.O) rose 0.8%, a day after Semafor, citing people familiar with the matter, reported that the tech company was in talks to invest $10 billion in ChatGPT owner OpenAI.

Communication Services (.SPLRCL) was the best performing sector of the day, while energy (.SPNY) rose along with the price of oil.

This week marks the start of fourth-quarter earnings season for S&P 500 companies, with results coming later this week from several of Wall Street’s largest banks.

Shares of investment bank Jefferies Financial Group (JEF.N) rose 3.8% on Tuesday, the day after Posted the second-best year for investment banking revenue. It also reported a 52.5% decline in fourth-quarter earnings.

Analysts expect total S&P 500 earnings in the fourth quarter to be down 2.2% from a year ago, according to IBES data from Refinitiv, as concerns about rising interest rates and the economy intensified.

Some investors are hoping for signs that the Fed may soon be taking a break from raising the federal funds rate seven times in 2022.

The World Bank Tuesday cut its growth forecasts for 2023 on Tuesday to levels teetering on the brink of recession for many countries as the impact of central bank rate hikes deepens.

US exchange volume was 10.02 billion shares, compared to the full-session average of 10.91 billion over the past 20 trading days.

Emerging issues outnumbered the NYSE by a ratio of 2.33 to 1; on Nasdaq, a ratio of 2.45 to 1 was in favor of progress.

The S&P 500 posted four new highs in 52 weeks and no new lows; the Nasdaq Composite recorded 71 new highs and 30 new lows.

Additional reporting by Ankika Biswas, Amruta Khandekar and Johann M Cherian in Bengaluru; Edited by Shinjini Ganguli, Shounak Dasgupta and Richard Chang

Our standards: The Thomson Reuters Principles of Trust.

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