Stocks hit new highs after Powell testimony.
The U.S. stock market returned to record highs on Wednesday after Federal Reserve Chairman Jerome Powell all but confirmed the central bank’s plan to lower interest rates.
All of Wall Street’s major indices opened sharply higher on Wednesday and closed in positive territory. The Dow Jones Industrial Average (NYSEARCA:DIA) was up more than 200 points in the morning session before paring gains. It would eventually settle up 76.78 points, or 0.3%, at 26,860.16.
The broad S&P 500 Index (NYSEARCA:SPY) climbed 0.5% to 2,993.01. The index briefly traded above 3,000 for the first time ever.
Eight of 11 S&P 500 sectors reported gains, led by energy and communication services. Information technology and consumer staples also outperformed the market.
The Nasdaq Composite Index (NYSEARCA:QQQ) rallied 0.8% to 8,202.53, a new record.
A measure of implied volatility known as the CBOE VIX (NYSEARCA:VXX) declined sharply on Wednesday, snapping a three-day win streak. The so-called “fear index” declined 6.7% to 13.14 on a scale of 1-100 where 20-25 represents the historic average.
Stocks caught fire after the opening bell as investors sifted through Jerome Powell’s testimony prepared for the House Financial Services Committee. In that testimony, the Federal Reserve Chairman said “uncertainties around trade tensions and concerns about the strength of the global economy continues to weigh on the U.S. economic outlook.”
For traders, that’s a strong signal that interest rates are heading lower.
The Federal Open Market Committee (FOMC) will hold its next policy meeting July 30-1 in Washington.
The Final Word: Markets are bracing for multiple rate cuts in 2019. According to CME Group’s FedWatch Tool, there’s an outside chance that the Fed will cut rates by 50 basis points later this month.