NEW YORK (AFP) – The Nasdaq rose to a record on Wednesday (July 10) as US stocks rallied following dovish commentary from Federal Reserve Chairman Jerome Powell that opened the door to an interest rate cut.
All three major indices surged to all-time intraday records after Powell’s written congressional testimony was released but the tech-rich Nasdaq Composite Index was the only one to hold the record, ending at 8,202.53, up 0.8 per cent.
The Dow Jones Industrial Average rose 0.3 per cent to 26,860.20, while the S&P 500 added 0.5 per cent at 2,993.07 after earlier rising above 3,000 points for the first time.
In the first of two days of congressional testimony, Powell said many central bankers believed the case for lower rates “had strengthened.”
Since the June meeting, when Powell’s dovish remarks were interpreted as signalling a possible cut, “it appears that uncertainties around trade tension and concerns about the strength of the global economy continue to weigh on the US economic outlook,” Powell said.
“I don’t think it’s changed anything. Everyone expected him to cut in July,” said Maris Ogg of Tower Bridge Advisors, who thinks the Fed will undertake a 25 basis point cut in interest rates this month.
“But a cut of 50 basis points is not gonna happen,” Ogg said. “We’re not seeing that much weakness and it would indicate that something is not working well.”
Following the testimony, most investors still predicted a smaller interest rate cut but a solid minority bet on a larger 50 basis point cut.
Large tech shares gained 1 per cent or more, including Apple, Amazon and Google parent Alphabet.
Other tech companies with big rises included Tesla, which jumped 3.9 per cent and Micron Technology, which advanced 3.8 per cent.
Petroleum producers were another buoyant sector, with ConocoPhillips and Devon Energy both winning more than two percent as oil prices climbed.
But Levi Strauss & Co slumped 12 per cent after second-quarter profit margins came in lower than analysts expected.
American Airlines climbed 1.8 per cent as it lifted a key revenue benchmark, even though it said the grounding of the 737 Max would lower second-quarter profits by US$185 million (S$250 million).