S&P 500 Hits 3,000 on Powell’s Capitulation

The Dow and broader U.S. stock market climbed toward record highs on Wednesday after Federal Reserve Chairman Jerome Powell set the stage for an imminent rate cut later this month.

S&P 500 Hits 3,000

All of Wall Street’s major indexes surged after the open on Wednesday, with the S&P 500 Index of large-cap stocks briefly surpassing 3,000 for the first time ever. The large-cap index settled up 0.5% at 2,993.07. Eight of 11 primary sectors reported gains, led by energy.

S&P 500 Index settled just below all-time high. | Source: Yahoo Finance.

The Dow Jones Industrial Average was up more than 200 points after the opening bell. It settled up 76.71 points, or 0.3%, at 26,860.20, snapping a three-day losing streak.

Meanwhile, the technology-focused Nasdaq Composite Index rose 0.8% to 8,202.53, a new high.

Powell Lays Foundation for Rate Cut

Federal Reserve Chairman Jerome Powell all but confirmed Wednesday that the central bank will lower interest rates later this month to bolster the economy. In prepared testimony before the House Financial Services Committee, Powell said the economic outlook remains tilted to the downside due to “trade tensions and concerns about the strength of the global economy.”

CME Group’s Fed Fund futures prices, which allow traders to bet on the direction of monetary policy, imply a 100% likelihood of a rate cut later this month. July Fed Fund futures suggest there’s a good chance the Fed will lower interest rates by at least 50 basis points.

Powell will appear before the Senate Banking Committee on Thursday for a second day of testimony. The Federal Open Market Committee (FOMC) plans to meet again July 30-31. It will be the final policy meeting before September.

U.S. Economy Slams on the Brakes: Atlanta Fed

After a much better than expected first quarter, the U.S. economy likely slammed on the brakes in Q2, underscoring the Federal Reserve’s concerns about flagging growth.

Gross domestic product (GDP), the value of all goods and services produced in the economy, is forecast to have grown just 1.4% in the second quarter, according to the Atlanta Fed GDP tracker. The economy grew 3.1% annually in the first quarter.

Hiring, business investment, manufacturing and inflation all fizzled in the second quarter, prompting the Fed to adopt a more neutral approach on monetary policy. Hiring picked up in June, but average hourly earnings grew less than expected.

Earlier this week, BlackRock predicted that the U.S. economy would grow just 1.8% in the second half of the year. The world’s third-largest asset manager warned of a steeper downturn in emerging markets and in Europe.

Featured image courtesy of Shutterstock. Chart via Yahoo Finance. 

Chief Editor to Hacked.com and Contributor to CCN.com, 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