Dow ends sharply higher – up 761 points after Powell comments

By Noel Randewich and Shreyashi Sanyal

Nov 30 (Reuters) – Wall Street ended sharply higher on
Wednesday after Federal Reserve Chair Jerome Powell said the
central bank might scale back the pace of its interest rate
hikes as soon as December.

The S&P 500 rallied from an earlier loss and the Nasdaq
jumped after the release of Powell’s remarks prepared for
delivery at the Brookings Institution think tank in Washington.

Powell also cautioned that the fight against inflation was
far from over and that key questions remain unanswered,
including how high rates will ultimately need to rise and for
how long.

“(The market) has waited with bated breath, looking for that
clarification in terms of duration and extent of Fed tightening.
And anything that gives hope to the idea the Fed is becoming
less hawkish is viewed as a positive for stocks, at least on a
short-term basis,” said Chuck Carlson, Chief Executive Officer
at Horizon Investment Services in Hammond, Indiana.

Bets that the Fed will reduce the size of its rate hikes, as
well as recent data pointing to a mild cooling in inflation,
have the benchmark S&P 500 index on track for its second
straight month of gains.

The CME FedWatch Tool showed futures traders seeing a 75%
chance that the Fed will raise interest rates by 50 basis points
at its December meeting, up from a 65% chance before Powell’s
comments were released. The FedWatch tool now shows a 25% chance
of a 75 basis point increase.

Heavyweight technology stocks Apple, Microsoft
and Nvidia rallied.

Tesla Inc’s shares surged after China Merchants
Bank International said Tesla’s sales in China in November were
boosted by price cuts and incentives offered on its Model 3 and
Model Y.

According to preliminary data, the S&P 500
gained 121.18 points, or 3.06%, to end at 4,078.81
points, while the Nasdaq Composite gained 484.62 points,
or 4.41%, to 11,468.40. The Dow Jones Industrial Average
rose 716.21 points, or 2.12%, to 34,568.74.

An ADP National Employment report showed private employment
increased by 127,000 in November, below expectations of 200,000
jobs, suggesting demand for labor was cooling amid high interest
rates.

“The ADP employment number not meeting expectations fits
into the narrative that the Fed will have room and start slowing
down its rate hikes, and that definitely benefits interest rate
sensitive assets,” said Keith Buchanan, a portfolio manager at
Globalt in Atlanta.

The Labor Department’s closely watched nonfarm payrolls data
is due on Friday. A report showed U.S. job openings falling to
10.334 million in October, against 10.687 million in the prior
month.

Another reading showed the U.S. economy rebounded more
strongly than initially thought in the third quarter.

The S&P 500 remains down about 15% so far in 2022, while the
Nasdaq index has lost about 27%.

Biogen Inc jumped after its experimental
Alzheimer’s drug slowed cognitive decline in a closely watched
trial.
(Reporting by Shreyashi Sanyal, Devik Jain & Bansari Mayur
Kamdar in Bengaluru, and by Noel Randewich in Oakland, Calif.;
additional reporting by Stephen Culp in New York; Editing by
Shounak Dasgupta, Chizu Nomiyama and Diane Craft)