Market Opening and Stock Rebound
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At the opening bell on Wednesday, major market averages saw a surge as Federal Reserve Chairman Jerome Powell prepared to address Capitol Hill.
Following a selloff on Tuesday, growth stocks notably rebounded, pushing market indices into the green.
Early in the trading session, the Nasdaq Composite was up by a solid 1.0%, the S&P 500 showed a 0.6% increase, and the Dow climbed by 0.5%.
Fed’s Outlook and Investor Sentiment
Powell’s scheduled appearance before the House Financial Services Committee at 10 a.m. ET reflected investor anticipation, as financial conditions ease and inflation expectations rise since the Fed’s January meeting.
Deutsche Bank’s Jim Reid noted the shift in investor sentiment towards the Fed’s future actions, with a reduced expectation of rate cuts in the near term.
UBS’ Paul Donovan commented on the expectations of a hawkish stance from Powell during his testimony, underscoring the importance of asking the right questions to glean valuable market insights.
Rate Movement and Economic Data
On Tuesday, rates experienced a decrease, with the 10-year Treasury yield falling by 4 basis points to 4.11% and the 2-year yield sliding by 3 basis points to 4.53%.
ING highlighted the uncertain rate trajectory, pointing out signs of frothiness in the broader risk landscape despite equities showing some weakness in the previous session.
The latest ADP jobs report revealed a rise of 140K in U.S. private sector employment for February, slightly below the expected 149K mark.
Simultaneously, the January JOLTS report was released alongside Powell’s testimony, projecting a lowering of job openings to 8.8 million.
Chief Economist Shepherdson emphasized the trend in job postings potentially shifting downwards, predicting a gradual decline in JOLTS figures, notwithstanding the initial January data.