S&P 500 ends 3-day losing streak. Dow jumps 700 points after Powell signals smaller rate hikes

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Stocks saw broad gains Wednesday after Federal Reserve Chair Jerome Powell confirmed that the central bank will slow the pace of its aggressive rate-hiking campaign that has weighed on markets.

The Dow Jones Industrial Average closed up 737.24 points, or 2.18%, to 34,589.77. Meanwhile, the tech-heavy Nasdaq Composite jumped 4.41% to 11,468.00. The S&P 500 added 3.09% to 4,080.11.

“It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” Powell said in a speech at the Brookings Institution in Washington, D.C. “The time for moderating the pace of rate increases may come as soon as the December meeting.”

Powell cautioned the Fed may stay with restrictive policy for a long time before it ends its inflation fight.

“Despite some promising developments, we have a long way to go in restoring price stability,” Powell said.

Powell’s comments bolstered growing optimism among some investors that the Fed will deliver a smaller, half percentage point rate hike at its next meeting on Dec. 14 after four straight increases of three quarters of a point to tame high inflation.

“Investors are looking for that rock of certainty – something to hang your hat on for greater predictability of where the Fed’s going with interest rates,” said Greg Bassuk, CEO of AXS Investments. “The messaging that the pace of rate increases can begin slowing as early as December was that rock.”

The 10-year Treasury yield eased a bit on the news.

Wednesday’s rally provided an 11th-hour boost to a winning November. The Dow and S&P 500 ended the month up roughly 5.7% and about 5.4%, respectively, while the Nasdaq Composite gained nearly 4.4%.

Lea la cobertura del mercado de hoy en español aquí.