Fabrice Cabaud
Wall Street’s three major averages on Wednesday ended well off their session highs, but bounced back from their worst day since mid-February. The focus was on Federal Reserve chair Jerome Powell’s testimony to Congress, with the central bank chief largely reiterating that policymakers were in no hurry to cut interest rates.
The tech-heavy Nasdaq Composite (COMP.IND) rose 0.58% to close at 16,031.54 points, boosted by a post-earnings surge in cybersecurity firm CrowdStrike (CRWD). The benchmark S&P 500 (SP500) reclaimed the 5,100 points mark, climbing 0.51% to settle at 5,104.76. The blue-chip Dow (DJI) advanced 0.20% to conclude at 38,661.05 points.
Of the 11 S&P sectors, nine ended in the green.
In prepared remarks ahead of a testimony to the U.S. House Committee on Financial Services, Powell said that he believed monetary policy rate was “likely at its peak for this tightening cycle.” However, he also reiterated that policymakers wanted to gain “greater confidence” that inflation was moving towards the Fed’s 2% target before it would be appropriate to cut rates.
During the testimony, Powell said that the number of potential rate cuts this year would depend upon the economy. He also wants to see “a little bit more data” before being confident enough that inflation was coming down.
“After a rather painful day on March 5, March 6 ended up seeing a rebound for the major market indices. This optimism came even in spite of comments by Federal Reserve Chairman Jerome Powell that indicated that, while good progress has been made in the fight against inflation, it could still be some time until interest rates are ultimately cut,” Daniel Jones, investing group leader of Crude Value Insights, told Seeking Alpha.
“He did make clear that we are likely at the peak of the interest rate hiking cycle and that cuts will probably begin later this year. But there are concerns about just how temporary some of the recent improvements in inflation are,” Jones added.
Market participants also received some indicators on the labor market on Wednesday. An ADP report showed that the U.S. private sector added 140K jobs in February, less than the expected 149K figure. Moreover, the latest Job Openings and Labor Turnover Survey (JOLTS) showed that job openings edged down in January to 8.863M from 8.889M in December 2023. The January reading was lower than the consensus estimate of 8.9M.
Additionally, the JOLTS report showed that the quits rate fell to its lowest level since August 2020, moving slightly down to 2.1% in January from 2.2% in December 2023.
Traders also received the Fed’s latest Beige Book report, which showed that economic activity in the central bank’s eight districts increased slightly, on balance, since early January.
Treasury yields were mixed on Wednesday, with longer-term maturities retreating and shorter-term maturities largely unchanged. The 30-year (US30Y) and 10-year yields (US10Y) were both down 3 basis points each to 4.24% and 4.11%, respectively. The more rate-sensitive 2-year yield (US2Y) was flat at 4.56%.
See how Treasury yields have done across the curve at the Seeking Alpha bond page.
Turning to active stocks, embattled lender New York Community Bancorp (NYCB) earlier tumbled as much as 47.2% in mid-day trade following a Wall Street Journal report that it was seeking a cash infusion. The bank soon after issued a press release in which it said it had raised more than $1B from a group of investors led by former U.S. Treasury Secretary Steven Mnuchin’s firm. Shares of the lender eventually ended 8.1% higher after the announcement.