Stocks close higher, Nasdaq hits a new record

The Nasdaq Composite finished at a fresh record high on Wednesday as stocks rallied across the board.

It was quite a session for equities, which were driven higher after Federal Reserve Chairman Jerome Powell hinted that a rate cut is coming.

During the trading day, the Dow, the S&P 500 and the Nasdaq all hit new intraday records, and the S<><>P crossed 3,000 points for the first time ever./ppThe Dow closed 0.3%, or 77 points, higher, while the S<><><><><><><><><><><><><><><><><><><><><><><><><><><>P finished up 0.5%. The Nasdaq closed up 0.8% at a new record high of 8,203./ppDuring the first day of his biannual congressional testimony on Wednesday, Powell pointed at economic crosscurrents including “uncertainties around trade tensions and concerns about the strength of the global economy [that] continue to weigh on the US economic outlook.” He also noted a href=”https://www.cnn.com/2019/07/10/business/federal-reserve-powell-house-testimony/index.html” target=”_blank”inflation continued to run below the Fed’s target/a./ppInvestors read that as a sure sign that the Fed plans on cutting its interest rates at its next meeting later this month./ppStock futures had been in the red Wednesday morning but turned higher after the remarks were published ahead of the opening bell./pp”The statement that Powell laid out set the tone. He said there are concerns and headwinds. It was certainly a dovish tilt,” said Minh Trang, senior FX trader at Silicon Valley Bank./ppMarket expectations of a near-term interest rate cut had dominated for weeks until last Friday’s jobs report. The better-than-expected data suggested that the economy might not need the boost that a rate cut would provide./ppOn Tuesday, Philadelphia Fed President Patrick Harker said he didn’t see any need for interest rate changes. He said he would consider a rate cut if the economy weakened substantially, according to a href=”https://www.wsj.com/articles/philadelphia-feds-harker-sees-no-need-for-interest-rate-changes-11562682203″ target=”_blank”The Wall Street Journal/a./ppBut Powell’s remarks on Wednesday seemed to send a clear signal to the market. On Thursday Powell will appear before the Senate Banking Committee. Expectations for a rate cut, measured by the a href=”https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html” target=”_blank”CME’s FedWatch tool/a, returned to 100%, with 73% expected a 25 basis point cut. Expectations for any rate action had slipped to 96% earlier Wednesday, after sitting at 100% for week./ppLower interest rate make it cheaper for companies to borrow money and are thus supportive for the stock market./ppThe minutes of the Fed’s June meeting echoed the position Powell had taken during the June press conference, highlighting uncertainties and risks to the economy./ppYields on US government debt, which is in part driven by interest rate expectations, dropped initially on Powell’s remarks but bounced back. The 10-year US Treasury yield is little changed at 2.0630%./p