In statements prepared for his testimony before the United States House of Representatives Committee on Financial Services, Powell reiterated the Fed’s central idea that high inflation and an “extremely tight” labor market justify raising rates.
“It’s in line with what was expected,” said Thomas Hayes of Great Hill Capital LLC in New York. “If anything, it sounds reassuring and sober about the realities of geopolitical risks and that the Fed will be nimble and effectively tactical about how to move forward and take everything into account rather than just going ahead with some predetermined plan.”
Traders now see a 5% chance the Fed will raise rates by 50 basis points at its March meeting and a 95% chance it will approve a 25 basis point hike.
All 11 major S&P sectors advanced in early trading, with financials rallying 1.2% after falling sharply so far this week. The banking index gained 1.4% after hitting its lowest level since September 2021 on the eve.
Shares in the energy sector resumed their upward march, with an advance of 1.8%, in a day in which Brent crude touched peaks of almost eight years after Western sanctions impacted the transportation of raw materials exported by Russia.
Wall Street indexes closed lower on Tuesday, with financial stocks bearing much of the damage, as investors weighed the impact of harsh sanctions against Russia for its invasion of Ukraine.
Source: Ambito
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