Dow Surges 600 Points on Fed Speak; Cryptocurrency Market Recovers $27 Billion

U.S. stocks surged on Wednesday, with the Dow adding more than 600 points after Federal Reserve Chairman Jerome Powell hinted at more gradual adjustments to monetary policy in the future. Cryptocurrency prices notched big gains, signaling to investors that the worst of the price collapse had ended.

Stocks Make a Comeback

All of Wall Street’s major indexes broke out on Wednesday, with the Dow Jones Industrial Average surging 617.91 points, or 2.5%, to 25,366.64. Twenty-seven of 30 Dow blue chips reported gains, led by Boeing Co (BA), Caterpillar Inc. (CAT) and Visa Inc. (V). Each company rose more than 4%.

The large-cap S&P 500 Index gained 2.3% to 2,743.78, with ten of 11 primary sectors contributing to the gains. The information technology grouping surged 3.4%. Consumer discretionary stocks jumped 3.3% on average.

A strong performance in information technology propelled the Nasdaq Composite Index sharply higher. The tech-laden average rose 3% to close at 7,291.59.

After Wednesday’s showing, the S&P 500 and Dow were back in positive territory for the year.

Powell Sparks Optimism

After eight rate hikes since late 2015, the Federal Reserve may be ready to put on the brakes – at least, that’s how investors took the latest public comments from Chairman Jerome Powell.

In prepared remarks to the Economic Club of New York, Powell said interest rates are already “just below” what most central bankers consider neutral. A neutral setting means policymakers aren’t considering raising or lowering interest rates for the time being.

“There is no pre-set policy,” Powell said, according to The Wall Street Journal. “We will be paying very close attention to what incoming economic and financial data are telling us.”

While the vast majority of traders are still forecasting a December rate hike, based on the 30-day Fed Fund futures prices, Powell’s comments suggest policymakers are in no hurry to resume tightening in 2019 and beyond. The U.S. economy remains on solid footing based on most available metrics, but housing sales have plummeted this year as rising mortgage costs prevent new buyers from entering the market. An ongoing trade war with China could also depress the largely consumer-driven recovery from expanding further.

Crypto Recovery Gathers Pace

The cryptocurrency market made a convincing break higher on Wednesday, offering cautious optimism that the worst of the multi-week downtrend had passed. At the bottom of the selloff, the crypto market cap was valued a $115 billion, down nearly $100 billion over two weeks. Since bottoming on Sunday, the market has recovered roughly $27 billion to reach $142 billion on Wednesday.

With the exception of bitcoin SV and a few dollar-backed stablecoins, all major assets in the top-50 recorded double-digit gains. At the time of writing, the average bitcoin price (BTC/USD) was up 16% to $4,369.33. The leading digital currency bottomed near $3,400 over the weekend.

Litecoin (LTC/USD) and Stellar (XLM/USD) were the top performers percentage-wise. The LTC price surged 18.1% to $35.8 while XLM rose 18.6% to $0.1673 (all figures according to CoinMarketCap).

XRP, the second-largest cryptocurrency by market cap, added 14.1% to $0.4005. Ethereum (ETH/USD) jumped 17.2% to trade at $125.76.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi