Wall Street soars thanks to comments deemed dovish by Jerome Powell
US stock markets soared on Wednesday night after the long-awaited intervention by the Chairman of the Fed at the Brookings Institute. The S&P 500 rebounded more than 3% and the Nasdaq 100 nearly 5% after Jerome Powell indicated the pace of rate hikes could ease as early as the December meeting.
However, the market may have overreacted to the Fed Chairman’s remarks, as he also said that “months of falling inflation have often been followed by further increases” and “much more will be needed.” elements to reassure us that inflation is actually falling”, which suggests that the Fed is still not ready to stop its monetary tightening despite the growing risk of recession.
Indeed, market operators shrugged off worrying comments about the economy from Amazon’s CEO and disappointing economic statistics. Andrew Jassy said “people are looking for bargains” and the economy is “much more uncertain” than previously thought.
On the macroeconomic level, the Fed’s Beige Book showed that companies are more uncertain and pessimistic about the American economy, the ADP report showed a decrease in job creations, the JOLTS report showed a decrease in job offers. employment, mortgage applications fell again and the Chicago PMI fell to a level that systematically coincided with a US recession. The renewed appetite for risk could therefore only be short-lived.
Nasdaq 100 daily price chart – key levels