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March 2, 2022, 4:25 p.m. EST

Dow ends 600 points higher as Powell affirms March rate liftoff, vows to stay nimble as Ukraine crisis unfolds

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By Joy Wiltermuth and Mark DeCambre

U.S. stock indexes finished sharply higher Wednesday, with gains gathering steam after Federal Reserve Chairman Jerome Powell outlined plans to begin dialing back the central bank’s easy-money stance to fight inflation, while playing down the prospect of a larger-than-usual increase of benchmark rates in March, in testimony on Capitol Hill.

Wall Street also monitored headlines indicating Ukraine and Russia could be headed for new negotiations, even as the conflict simmered.

How did stock benchmarks end?

  • The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.06% rose 596.40 points, or 1.8%, ending at 33,891.35.

  • The S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.23% climbed 80.28 points, or 1.9%, closing at 4,386.54, as each of the broad-market benchmarks sectors advanced.

  • The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.21% rose 219.56 points, or 1.6%, finishing at 13,752.02, after hitting an intrasession nadir at 13,493.90.

On Tuesday , the Dow fell nearly 600 points, or 1.8%, while the S&P 500 and Nasdaq Composite each slid 1.6%.

What drove the market?

Stocks erased sharp losses from a day earlier after Fed Chairman Powell testified that it would be appropriate for the central bank to raise its benchmark interest rate, currently in a range between 0% and 0.25%, at its meeting in two weeks. Powell said he supported a 25 basis point increase , rather than a larger 50 basis point increase, and would propose such a move when the Fed convenes its two-day meeting mid March.

Fed-fund futures were pricing in a near-zero chance that the Fed would raise interest rates by a half-point in March, a dramatic shift from recent weeks. The 10-year Treasury rate /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +1.54% shot higher to 1.862%, marking its biggest daily gain in two years, with the advance for stocks led primarily by the S&P 500’s energy /zigman2/quotes/210600521/delayed XX:SP500.10 +2.53% and financials /zigman2/quotes/210599854/delayed XX:SP500.40 +0.13% sectors.

Powell’s testimony “did clarify his and the Fed’s approach to withdrawing stimulus in 2022 amid increased uncertainty from the Russia-Ukraine conflict,” said Bill Adams, chief economist at Comerica Bank, in written comments, adding that Powell sees the maximum employment part of his mandate as largely fulfilled.

“With inflation at a multidecade high, the Fed is anxious to get off of a crisis footing,” Adams said, while also looking to “cool demand enough to get inflation under control, but not choke off the recovery.” 

However, St. Louis Fed President James Bullard said the central bank needs to adopt a more aggressive monetary policy stance to combat surging pricing pressures. Bullard, a voting member of the rate-setting Federal Open Market Committee this year, has consistently called for an aggressive approach to monetary tightening.

Comments from monetary policy makers come as investors also watched headlines from the seventh day of conflict in Ukraine that has seen Russian forces step up shelling of civilian areas.

Moscow continued to pound Ukraine’s second-largest city, Kharkiv, on Wednesday, with both sides indicating they were ready to resume talks to end the fighting. The U.N. General Assembly voted on Wednesday to condemn Russia’s Ukraine invasion, while calling for an immediate end to the clashes.

Surging energy prices also were in focus, with U.S. crude oil prices settling at $110.60 a barrel on the New York Mercantile Exchange, the highest level in about 11 years, according to FactSet data.

The U.S. and other countries in the International Energy Agency agreed on Tuesday to release 60 million barrels of oil from their emergency reserves, to help with any supply shortfall caused by Russia’s invasion of Ukraine. Also, OPEC+, made up of the Organization of the Petroleum Exporting Countries and its allies, including Russia, offered no surprises at its monthly meeting, quickly agreeing to boost production in April  by another 400,000 barrels a day .

US : Dow Jones Global
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Volume: 320.97M
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BX : Tullett Prebon
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Volume: 168.89M
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