Home Editor's Picks Wall Street climbs ahead of Powell’s testimony, chip stocks extend rally

Wall Street climbs ahead of Powell’s testimony, chip stocks extend rally


Wall Street climbs ahead of Powell’s testimony, chip stocks extend rally By Reuters

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Published Mar 07, 2024 05:44AM ET
Updated Mar 07, 2024 09:55AM ET

© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., March 5, 2024. REUTERS/Brendan McDermid/FILE PHOTO

By Bansari Mayur Kamdar and Amruta Khandekar

(Reuters) – Wall Street’s main indexes gained on Thursday ahead of more commentary from Jerome Powell after the Federal Reserve chair stuck to the script overnight by saying the central bank still expects to cut rates later this year.

Powell said rate reductions will “likely be appropriate” later this year, “if the economy evolves broadly as expected” and once officials gain more confidence in inflation’s steady decline.

The comments kept alive investors’ expectations of an interest rate cut in June, giving a boost to U.S equities, which had faltered in the days leading up to the testimony.

Wall Street’s main indexes closed higher on Wednesday, with rate-sensitive technology and chip stocks in the lead.

Most megacap growth and technology stocks rose in early trading on Thursday.

Chip firms such as Nvidia (NASDAQ:NVDA) and Micron Technology (NASDAQ:MU) gained 1.4% and 2.3% respectively, extending their rally from the previous session.

The Philadelphia semiconductor index hit a fresh record high and was last up 1.8%.

All the 11 major S&P 500 sectors rose, with materials and information technology leading the charge.

“We listened to Powell yesterday and it sounds like there will be at some point this year, a rate cut. We just don’t know when,” said Joe Saluzzi, co-manager of trading at Themis Trading.

Meanwhile, Fed Governor Michelle Bowman said the U.S. economy is not at the point where the central bank should reduce interest rates.

All eyes will be back on Powell who is set to wrap up his two-day testimony on Thursday.

The number of Americans filing new claims for unemployment benefits was unchanged last week as the labor market continued to gradually ease, the Labor Department’s data showed.

The data comes ahead of the crucial nonfarm payrolls report, which could provide further details on the strength of the U.S. labor market on Friday.

“Even if the payrolls are stronger than expected, that’s not going to take the rate cut argument off. Unless you start to see some extreme inflationary numbers, the odds are the cut is coming,” Saluzzi said.

At 9:32 a.m. ET, the Dow Jones Industrial Average was up 219.73 points, or 0.57%, at 38,880.78, the S&P 500 was up 32.08 points, or 0.63%, at 5,136.84, and the Nasdaq Composite was up 111.59 points, or 0.70%, at 16,143.14.

Lingerie maker Victoria’s Secret & Co dropped 26.7% on a weak annual forecast.

Eli Lilly (NYSE:LLY) slipped 1.0% after rival Novo Nordisk (NYSE:NVO) said early trial data for its highly anticipated experimental drug, amycretin, showed that participants had a weight loss of 13.1% after 12 weeks.

Advancing issues outnumbered decliners by a 5.27-to-1 ratio on the NYSE and by a 2.45-to-1 ratio on the Nasdaq.

The S&P index recorded 39 new 52-week highs and no new lows, while the Nasdaq recorded 46 new highs and 11 new lows.

Wall Street climbs ahead of Powell’s testimony, chip stocks extend rally

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