Markets Right Now: Stocks rise as Powell signals rates cut

Markets Right Now: Stocks rise as Powell signals rates cut

The dollar fell on Wednesday after Federal Reserve Chairman Jerome Powell struck a downbeat tone in congressional testimony, saying trade uncertainties and concerns about the global outlook continued to exert pressure on the US economy.

The Financial Stability Oversight Council is looking at Libra according to Powell.

But later, in the question-and-answer period, several Democratic committee members offered support for Powell's leadership and a rejection of Trump's criticism.

Waters and other Democrats urged Powell to stand up to Trump's attacks.

"I can't hear you", said Waters in response to which the hearing room erupted in laughter. She tells Powell that it was essential that he and other Fed official refuse to "submit to these high pressure tactics".

Powell didn't answer whether he believes Trump has the authority to fire him, but said he meant to serve out his full four-year term. Earlier, the S&P 500 briefly topped 3,000 for the first time after Powell signaled a willingness to lower rates, citing a slowing global economy and trade issues.

U.S. equity markets got off to a bullish start to the day as the S&P 500 Index moved to make an all-time high after hitting the 3,000 mark - a remarkable level that traders have been optimistically eyeing over the past months. The gains came after Powell's semi-annual monetary report to Congress was released. The two-year Treasury yield, a proxy for market sentiment about interest rate policy, was last 7.3 basis points lower at 1.8317%.

Following Mr Powell's comments, the dollar fell against a basket of currencies and the major share indexes opened higher.

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"Powell's really making the case that an insurance rate cut is important so July is looking much more likely despite the fact we had a pretty good jobs report", said Chris Zaccarelli, chief investment officer, Independent Advisor Alliance, Charlotte, North Carolina.

A broad index of world stock markets edged higher on Wednesday while the USA dollar fell as comments from Federal Reserve Chairman Jerome Powell bolstered expectations for an interest rate cut from the US central bank this month.

In testimony to a congressional committee, Powell pointed to "broad" global weakness that was clouding the USA economic outlook amid uncertainty about the fallout from the Trump administration's trade conflict with China and other nations. Meanwhile, inflation has fallen farther from the Fed's target.

Many investors have put the odds of a rate cut this month at 100 percent.

President Donald Trump has repeatedly attacked the Fed for raising rates four times a year ago and has called for a full percentage point cut.

Since a series of Trump trade-related tweets in late May, both investors and the Fed have begun shifting their stance, with markets now expecting a cut of at least a quarter of a percentage point when the Fed's rate-setting committee releases its next policy statement on July 31.

Powell will testify for two days starting Wednesday at a time when the economic landscape is a mixed one: The U.S. job market appears resilient.