Dow Jones Industrial Average has recovered to a historic high on Friday, after US Federal Bank President Jerome Powell marked that the central bank could start loosening monetary policy next month.
Dow climbed 846.24 points, or 1.89%, reaching a new high and closing at a historical level of 45,631.74. The S&P 500 increased by 1.52% and closed to 6,466.91. At the highest point of the session, the wide market index reached three points below its record. Nasdaq Composite won 1.88% and closed at 21,496.53.
The shares of high capitalization technology companies rose after Powell’s statements. Nvidia rose 1.7%, while Meta Platforms rose more than 2%. Alphabet and Amazon rose more than 3%. Tesla’s shares rose about 6%.
In a lukewarm speech at the Central Bank’s annual meeting in Jackson Hall, Wyoming, Powell said that “the basic prospects and the changing risk balance may justify the adaptation of our political stance.” The head of the Fed added that “the balance of risks seems to change” between the dual mission of the Central Bank for full -time employment and steady prices. He mentioned “radical changes” to tax, commercial and immigration policies.
Expectations to reduce interest rates by a quarter of the rate in September increased to about 83% from about 75% earlier a week, according to the CME Group’s Fedwatch tool.
“The bar is now extremely high for Fed to keep interest rates unchanged in less than a month,” said Chris Zaccarelli, Northlight Asset Management’s investment chief executive. “It is not surprising that the markets have reacted enthusiastically, and both investors in shares and bonds will be happy if prices are closing this afternoon at the levels they are now negotiating.”
Friday’s performance has contradicted the much more pessimistic march of the market this week. The main indicators began the meeting lower than the beginning of the week due to the pressure received by the shares of high capitalization technology companies. The last rise helped investors recover most of the losses they had earlier in the week.
For the week, the DOW 30 shares rose 1.5%and the S&P 500 won 0.3%, while Nasdaq fell 0.6%.