Stocks rise for a second day on hopes the Fed will eventually cut rates

Wednesday, 5 June 2019 21:00 WIB

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Stocks traded higher on Wednesday, building on the strong gains from the previous session, as Wall Street increased bets that the Federal Reserve will lower interest rates soon.

The Dow Jones Industrial Average rose 150 points at the open, while the S&P 500 advanced 0.6%. The Nasdaq Composite jumped 0.7%.

Fed Chair Jerome Powell said Tuesday the central bank will keep an eye on current developments in the economy, and would do what it must to “sustain the expansion.” Powell did, however, note that the central bank could not determine when or how global trade issues would be settled.

Those comments sent the Dow rallying more than 500 points on Tuesday. Global stocks rose overnight as well. In Asia, the Nikkei 225 index jumped 1.8% while the Hang Seng gained 0.5%. In Europe, the Stoxx 600 index climbed 0.6%.

Worries over the economy increased recently amid weakening economic data and persisting trade tensions.

Private payrolls increased by just 27,000 in May, according to data from ADP and Moody’s Analytics released Wednesday. Economists polled by Dow Jones expected an increase of 173,00 jobs. May’s print was the worst since March 2010.

Treasury yields fell on the news. The benchmark 10-year yield traded at 2.09% while the 2-year rate hit its lowest level since December 2017.

Trade tensions were slightly assuaged, however, as several Republican lawmakers have noted their opposition to new tariffs on Mexican imports while some have hinted at the possibility of blocking such levies.

Meanwhile, Treasury Secretary Steven Mnuchin is scheduled to meet with People’s Bank of China Governor Yi Gang this weekend. This would be the first in-person meeting between key trade negotiators from the U.S. and China.

Source: CNBC


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