Stocks finished higher Wednesday as Wall Street welcomed new signals suggesting the Federal Reserve is ready to cut interest rates for the first time in a decade.
Technology stocks drove much of the gains, nudging the Nasdaq composite to an all-time high. The benchmark S&P 500 index briefly traded above 3,000 for the first time before pulling back to just below its most recent record high a week ago.
The S&P 500 index rose 13.44 points, or 0.5%, to 2,993.07. The index, which set three record highs last week, is now less than 0.1% below its all-time high set July 3.
The Dow Jones industrial average gained 76.71 points, or 0.3%, to 26,860.20.
The Nasdaq climbed 60.80 points, or 0.7%, to 8,202.53, a record. It's previous record high was also set July 3.
The Russell 2000 index of smaller company stocks rebounded from a brief slide, gaining 2.46 points, or 0.2%, to 1,565.05.
Major stock indexes in Europe closed mostly lower.
The market climbed early on after Fed Chairman Jerome Powell said many Fed officials believe a weakening global economy and rising trade tensions have strengthened the case for a rate cut.
Powell's remarks, which he delivered as part of his semi-annual monetary report to Congress, allayed investors' concerns that an unexpectedly strong U.S. jobs report on Friday might give the Fed reason to stay put on interest rates.
"Investors are increasingly confident that the Fed will cut rates by a quarter-point at the end of the month, which most investors expected," said Kate Warne, chief investment strategist at Edward Jones. "This removed a little bit of the uncertainty there, and that's why we're seeing stocks move higher."
The dollar fell and the price of gold rose.
Powell's testimony before the House Financial Services Committee on Wednesday came at a time when the U.S. economic landscape is mixed. While the job market appears resilient and consumer spending and home sales look solid, the economy is likely slowing. And the U.S. trade disputes have added uncertainty to the economic outlook.
In his prepared statement, Powell said that since Fed officials met last month, "uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook." Meanwhile, inflation has fallen farther from the Fed's target.
The Fed's benchmark interest rate currently stands in a range of 2.25% to 2.5% after the central bank raised rates four times last year. Many investors have put the odds of a rate cut this month at 100%.
A quarter-point cut in interest rates, which many investors expect, isn't likely to have a big impact on consumers' credit cards or mortgage rates. But it would reassure markets that the Fed would be open to further rate cuts if more signs of weakness in the global economy emerge, Warne said.
"Shifting from raising rates to lowering rates is a regime change," she said. "The second thing is we've already seen long-term interest rates come down partly in expectation of the rate cut."
Powell is due to appear before the Senate Banking Committee today.
Investors will have to wait until the end of the month to see what action the Fed takes on interest rates at its next meeting of policymakers. Before then, however, the market will turn its attention to the upcoming company earnings reporting season, which begins next week.
Companies have been lowering expectations for how much profit they made in the April-June quarter. Wall Street now projects that overall S&P 500 company earnings for the quarter fell 2.6% from a year earlier, according to FactSet.
Business on 07/11/2019