Dow Soars as Fed Hints at Help for Economy - InvestingChannel

Dow Soars as Fed Hints at Help for Economy



Equities surged on Tuesday, climbing back from a big rout in the past month, after Federal Reserve Chairman Jerome Powell signaled the central bank was open to easing monetary policy to save the economy and as trade tensions eased amid comments by China and Mexico.

The Dow Jones Industrial Average popped 480.96 points, or 1.9%, to adjourn Tuesday at 25,300.74

The S&P 500 gained 58.82 points, or 2.1%, to 2,803.27

The NASDAQ Composite spiked 194.10 points, or 2.7%, to 7,527.12.

The major indexes had their second-best day of 2019.

Stocks have been battered over the past month. The S&P 500 is down more than 5% in that time period while the Dow has lost 4.6%. The NASDAQ, meanwhile, is down more than 8% in the past month.

Powell said the central bank will “act as appropriate to sustain the expansion.” He noted, however, the Fed does not know “how or when” global trade issues will be resolved. “We are closely monitoring the implications of these developments for the U.S. economic outlook.”

The Chinese Commerce Ministry said in a post that the “differences and frictions between the two sides” should be dealt with through talks, according to a Google translation. But the post also said talks “need to be based on mutual respect, equality and mutual benefit.”

Wall Street took the comments as a sign maybe the country was easing up on its tough rhetoric of the last month. The U.S. and China hiked tariffs on billions of dollars worth of each other’s goods in May, sparking worries of a prolonged trade war.

The Trump administration also threatened to slap tariffs on all imports coming from Mexico, adding to those concerns. Those worries were assuaged after Mexican Foreign Minister Marcelo Ebrard said Tuesday he expects both countries to find common ground on immigration and trade.

Republican lawmakers are also discussing whether they may have to vote to stop the new tariffs on Mexican goods threatened by Trump, according to The Washington Post, citing people familiar with the matter. The report said GOP lawmakers are worried about the ramifications for businesses and consumers of the tariffs.

Shares of GM flew 6% and Ford rose 3.2%. Both are companies who could take a hit under the new tariffs.

Bank shares rose broadly as yields climbed. Citigroup, Morgan Stanley and Bank of America all closed more than 4% higher. Goldman Sachs picked up 3.7%, and J.P. Morgan Chase rose 3.1%.

Prices for the benchmark 10-year U.S. Treasury slid, raising yields to 2.14% from Monday’s 2.08%. Treasury prices and yields move in opposite directions.

Oil prices improved 28 cents to $53.53 U.S. a barrel.

Gold prices gained $2.80 at $1,330.70 U.S. an ounce.

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