June 27, 2019

Shares - Wall Road Flies Excessive on Fed Persistence, Job Features

07 January 2019, 03:10 | Hattie Nash

Shares - Wall Road Flies Excessive on Fed Persistence, Job Features

Traders work on the floor of the New York Stock Exchange on Jan 3 2019

The Fed, which hiked benchmark USA interest rates four times previous year including in December, is however not on a preset path and could pause policy tightening as it did in 2016 when global growth concerns led to doubts about the US economic recovery, he said. The blue-chip Dow Jones Industrial Average finished at 23433.16, up 746.94 or +3.05% and the tech-based NASDAQ Composite closed at 6738.86, up 275.36 or +3.79%.

He also defended his independence, saying he would not resign if requested Donald Trump asked.

The losses in the Japan also followed Thursday's grim Wall Street session, which saw major indices end down more than two percent after Apple slashed its revenue forecast on weak demand in China and a United States report showed manufacturing activity slumping to a two-year low.

The Fed is "listening sensitively" to the market signals, as well as data showing that inflation rates remain relatively muted, he added.

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In a session emblematic of the elevated volatility that has gripped markets for weeks, all three major US stock indexes surged more than 3 percent in one of the broadest advances in years.

Powell triggered an acceleration in the selling pressure when he said, "As always, there is no preset path for policy". "Average hourly earnings moved up and that's quite welcome and also for me at this time does not raise concerns about too-high inflation", he said.

Although still low by historical standards, this latest hike put interest rates at the highest level in almost a decade. "The Fed has willfully ignored trade and interest rate risks while talking a hawkish game". The stock market has seen stomach-churning declines since October, a development that Trump has blamed on the Fed's continued rate hikes, although the president's trade dispute with China as well as concerns about global economic growth also played a part in the market volatility.

Powell's Fed hiked rates four times a year ago and projections from its December 19 meeting show officials expect two more hikes in 2019. But it has been gradually reversing that stance over the past year, although the balance sheet still remains above $4 trillion.

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Since mid-December, investors have been expressing disagreement with Powell's assessment of the economy, saying the Fed had it all wrong and that the economy was weakening.

Powell on Friday stressed that the Fed was prepared to adjust the pace at which it trimmed the balance sheet if necessary to support economic growth.

Powell told the panel in Atlanta that he has not received any communications from the White House so far and has not scheduled a meeting with Trump. Fed watchers have said that the bar is very high for the president to remove Powell "for cause" as the law appears to require, provided Powell decides to fight the dismissal in court.

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