Stocks traded higher Wednesday after testimony from Federal Reserve Chairman Jerome Powell bolstered the case for easier monetary policy.
The S&P 500 gained 0.6 percent to reach an intraday record, the Nasdaq also hit an all-time high, rising 0.9 percent, and the Dow Jones Industrial Average jumped 162 points.
In prepared testimony to the House Financial Services Committee, Powell said business investments across the U.S. have slowed “notably” recently as uncertainties over the economic outlook linger.
“Crosscurrents have reemerged,” Powell said. “Many Federal Open Market Committee participants saw that the case for a somewhat more accommodative monetary policy had strengthened. Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.”
Powell will deliver his testimony at 10 a.m. ET and answer questions from lawmakers.
“Powell’s prepared testimony struck a decidedly dovish cord with ‘uncertainties’ over trade and global growth since the June FOMC meeting characterized as having dimmed the outlook. By way of an update, the Chair just confirmed that things have gotten worse,” said Ian Lyngen, head of U.S. rates at BMO Capital Markets.
His testimony comes after the Fed opened the door to cutting rates at its previous monetary policy meeting in June. The central bank dropped the word “patience” in its statement then.
Traders have priced in a 100 percent probability of a Fed rate cut in July, according to the CME Group’s FedWatch tool. A stronger-than-expected June jobs report tempered expectations for a more aggressive easing.