Wall Street indexes advance as Fed's Powell fuels hopes for rate cuts this year

US stock market: Wall Street's three major indexes closed higher on Wednesday as economic data and comments from Federal Reserve Chair Jerome Powell reinforced expectations that the US central bank would reduce its benchmark interest rate this year.

Powell said on Wednesday he expected the Fed to cut rates and that the US economy appeared nowhere near a recession, although he shied away from committing to a timetable for rate easing as progress on inflation was not assured.

In prepared remarks ahead of his congressional testimony, Powell said inflation had "eased substantially" since hitting 40-year highs in 2022, but that policymakers still needed "greater confidence" in its decline before rate cuts.

"He was clear that the Fed does see rate cuts coming this year. That's what the markets needed to hear. Was it couched in some ambiguous terms? Yes, but overall the message was clear," said Quincy Krosby, chief global strategist for LPL Financial. "It's not if but when the Fed initiates a rate easing policy."

Along with Powell's testimony, Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, said Wednesday's economic data also boosted hopes for rate cuts and confidence in the labor market.

Data showed US private payrolls increased slightly less than expected in February. And the Job Openings and Labor Turnover Survey (JOLTS) showed job openings fell marginally in January, while hiring declined as labor market conditions continued to gradually ease.

"The number of job openings shriveled a bit, but are still quite healthy and indicative of a labor market that is still looking pretty stout," said Luschini. "It fits the Goldilocks narrative that's become consensus."

February's nonfarm payrolls report due on Friday is expected to offer further clarity on the state of the labor market.

The Dow Jones Industrial Average (.DJI) rose 75.86 points, or 0.20 per cent, to 38,661.05. The S&P 500 (.SPX) gained 26.11 points, or 0.51 per cent, at 5,104.76 and the Nasdaq Composite (.IXIC) added 91.96 points, or 0.58 per cent, at 16,031.54.

Wall Street indexes had lost more than 1 per cent on Tuesday with weakness in megacap stocks and as investors anxiously awaited Powell's comments. Nine of the 11 major S&P 500 industry sectors finished in the green on Wednesday, led by rate-sensitive utilities (.SPLRCU), up almost 1 per cent, and information technology (.SPLRCT), which rose 0.9 per cent. Consumer discretionary (.SPLRCD) was the biggest loser, down 0.4 per cent.

Chip companies outperformed the broader market after underperforming on Tuesday, with the Philadelphia semiconductor index (.SOX) rallying 2.4 per cent to a record closing high for the fourth time in five sessions. Putting pressure on the consumer index, Tesla (TSLA.O) fell 2.3 per cent, losing ground for its third straight day.

A closely watched Morgan Stanley analyst lowered his price target on the stock, saying that electric-vehicle demand was continuing to weaken in key markets including China despite hefty price cuts. Also a Baird analyst said Telsa's first-quarter earnings were at risk, suggesting delivery estimates still need to go lower.

US-listed shares of China's JD.com advanced 16.2 per centafter the e-commerce group reported fourth-quarter revenue above estimates and enlarged its share repurchase program.
Shares of cryptocurrency-linked companies advanced, including a 10 per cent gain for Coinbase Global (COIN.O) and MicroStrategy's (MSTR.O) 18.6 per cent increase.

CrowdStrike Holdings (CRWD.O) shares soared 10.8 per cent after it forecast annual results above Wall Street estimates, lifted by strong enterprise spending on cybersecurity to counter rising online threats. However, rival Palo Alto (PANW.O) fell 4 per cent.
Advancing issues outnumbered decliners by a 2.82-to-1 ratio on the NYSE where there were 493 new highs and 59 new lows.

On the Nasdaq 2,605 stocks rose and 1,687 fell as advancing issues outnumbered decliners by about a 1.54-to-1 ratio. The S&P 500 posted 53 new 52-week highs and five new lows while the Nasdaq recorded 229 new highs and 120 new lows. On US exchanges 12.54 billion shares changed hands compared with the 12.06 billion average for the last 20 sessions.