Powell’s assurances that the US is not in recession gave Wall Street wings

Wall Street indices rallied after the decisions of the Federal Reserve and the bank governor’s statements that the economy is not in recession, with the S&P 500 climbing 2.6% and the tech Nasdaq jumping 4%.

The Federal Reserve confirmed analysts’ estimates, raising interest rates for a second straight time by 75 basis points, as part of its effort to bring inflation back close to its 2% target from 40-year highs that have soared.

The Fed has the right tools and determination to bring inflation back to its 2% target, Governor Jerome Powell said at the press conference after the monetary policy decisions.

The central banker made clear that the pace of hikes would depend on incoming data and the development of the economy, while noting that “another unusually large hike” may be the appropriate approach at the next meeting in September, leaving open the possibility of another an increase of 75 basis points.

Citing “particularly great uncertainty” in the international environment, Paul explained that the Fed will provide reliable guidance for the future on a “meeting-by-meeting basis.” Against that backdrop, he acknowledged that the Fed may need to slow its rate hikes at some point as it moves toward increasingly tighter policy, fueling investors’ hopes for a softer stance next, should it be seen de-escalation of inflationary pressures.

At the same time, he made it clear that the American economy is not in recession, characterizing the labor market as particularly strong. “A smooth landing of the economy is our goal, it’s a challenge, but that’s what we’re aiming for,” he said.

Indicators – Statistics

On the board, the Dow Jones gained 436.05 points, or 1.37%, to 32,197.59, while the S&P 500 added 102.56 points, or 2.62%, to 3,921.05. The technology Nasdaq with a jump of 469.85 points or 4.06% climbed to 12,032.42 points.

Of the 30 stocks that make up the Dow Jones industrial index, 23 closed with a positive sign and seven with a negative. The biggest gainer was Microsoft with gains of $16.84 or 6.69% to close at $268.74, followed by Salesforce at $180.30 with an increase of 5.77% and Walmart with gains of 3, 78% to $126.59

Biggest losers were 3M (-1.34%), Travelers (-1.18%) and Visa (-0.95%).

Meanwhile, investors continue to evaluate corporate announcements about their second-quarter financial results. More than 150 S&P 500 companies have reported results so far, with about 70% beating analysts’ estimates, according to FactSet data.

Tech giants Alphabet and Microsoft missed analysts’ earnings estimates in after-hours earnings calls yesterday, with both companies posting double-digit revenue growth.

Investment attention was gathered by the results of other big names in the American economy such as Boeing, Visa, Kraft Heinz, Chipotle Mexican Grill, Texas Instruments.

Later in the day, data released today showed that durable goods orders rose 1.9% in June mainly due to gains in the auto and aircraft categories.

At the same time, the US goods trade deficit shrank 5.6% in June to $98.2 billion, the US Commerce Department said.