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Jan. 11, 2022, 4:45 p.m. EST

S&P 500 snaps 5-session skid, Nasdaq leads stock indexes to close higher after Powell’s testimony

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By Christine Idzelis and William Watts

U.S. stocks ended higher Tuesday, with tech-related shares extending a bounce from the previous session, as investors appeared to take testimony by Federal Reserve Chairman Jerome Powell in stride as they looked for clues to the pace of future rate increases and other plans for tightening monetary policy in 2022.

What did major indexes do?

  • The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.62% rose 183.15 points, or 0.5%, to close at 36,252.02.

  • The S&P 500 /zigman2/quotes/210599714/realtime SPX -1.72% advanced 42.78 points, or 0.9%, to end at 4,713.07.

  • The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -1.80% jumped 210.62 points, or 1.4%, to finish at 15,153.45.

On Monday , the Dow and S&P 500 ended lower, while the Nasdaq Composite closed fractionally higher. According to Dow Jones Markets Data, the Nasdaq’s reversal from a 2.7% slide earlier was t he strongest intraday reversal since Feb. 28, 2020 . The late-day reversal was driven by companies that had seen the worst year-to-date performance, according to Bespoke Investment Group.

What drove the market?

Major U.S. stock benchmarks ended higher after investors digested Federal Reserve Chairman Jerome Powell’s testimony before the Senate Banking Committee in a hearing on his nomination to serve a second term.

Powell painted a picture of a soft landing for the economy as the Fed moves to remove emergency stimulus measures and begin raising interest rates, even as market participants increasingly expect the central bank to move much more aggressively than previously anticipated after inflation proved hotter and much more persistent than policy makers had predicted.

“It really is time for us to move away from those emergency policy settings to a more normal level. It really should not have negative effects on the labor market,” said Powell, who is widely expected to be confirmed by the Senate.

Read: Powell says Fed can cool inflation without damaging labor market

Investors also assessed speeches from regional Fed presidents and prepared for Wednesday’s inflation data.

Kansas City Fed President Esther George, said in a speech Tuesday that the central bank should speedily reduce its enormous $8.5 trillion pile of bondholdings to help curb the highest U.S. inflation in almost 40 years and discourage undue risk-taking.

Cleveland Fed President Loretta Mester said she would back a rate increase in March if the economic backdrop resembles current conditions. Mester said she sees the Fed raising rates three times in 2022. George and Mester are both 2022 voting members of the Fed’s policy-setting Federal Open Market Committee.

Key Words: ‘Tough sledding’ ahead for high-flying inflation trades, says investor who called ’87 stock-market crash

Tech and other so-called growth stocks — shares of companies whose revenue and earnings are expected to grow faster than average — have been hard hit as Treasury yields have risen in response to expectations the Fed will be much more aggressive than previously anticipated in raising rates in an effort to rein in inflation that is well above target.

“The whole tech sector has been beaten up pretty good,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab, in a phone interview Tuesday. “There’s a pretty big trend of people moving out of growth assets into more value assets, which is something that is consistent with the concerns about higher interest rates.”

/zigman2/quotes/210598065/realtime
US : Dow Jones Global
29,590.41
-486.27 -1.62%
Volume: 320.97M
Sept. 23, 2022 5:04p
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/zigman2/quotes/210599714/realtime
US : S&P US
3,693.23
-64.76 -1.72%
Volume: 2.22B
Sept. 23, 2022 5:04p
loading...
/zigman2/quotes/210598365/realtime
US : Nasdaq
10,867.93
-198.88 -1.80%
Volume: 5.19B
Sept. 23, 2022 5:16p
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