Equities Rose as Powell Said Economy Is Holding Up – US Market Wrap

Equities rebounded after Powell reassured investors that the economy is still solid despite uncertainties stemming from Trump’s trade war.

Following a small decrease caused by Fed comments indicating that economic risks had intensified, the S&P 500 rose. The rebound was also fuelled by a rise in chipmakers on reports that the Trump administration intends to reverse Biden-era AI chip curbs. The dollar rose versus most major currencies, as Treasury yields fell.

Fed policymakers emphasised in a statement released before to Powell’s press conference on Wednesday that they see an increasing risk of both higher inflation and higher unemployment. With unemployment remaining low and demand stable, policymakers have stated that they are willing to keep interest rates constant until they have a better sense of where the economy is headed.

Price action Wednesday was especially muted when compared to April 16th, when equities and the dollar fell after Powell first mentioned the growing tension between the Fed’s dual mandate of controlling price pressures and bolstering employment. Then, at a period of market turbulence, his remarks were interpreted by traders as a commitment to put the fight against inflation first, even if it meant that investors would pay a price.

The S&P 500 rose 0.4%. The Nasdaq 100 added 0.4%. The Dow Jones Industrial Average rose 0.7%. The yield on 10-Yr Treasuries declined two basis points to 4.28%.