The major US markets are currently pointing to a lower open on Wednesday, with stocks likely to give back ground after moving notably higher in the previous session.
Traders may look to cash in on some of yesterday’s gains, which came amid a positive reaction to comments by Federal Reserve Chair Jerome Powell.
Powell acknowledged recent indications of easing inflation but noted that the disinflationary process has a long way to go and cautioned further interest rate hikes could be needed.
Overall trading activity may be somewhat subdued, however, with a relatively light economic calendar keeping some traders on the sidelines.
Reports on initial jobless claims and consumer sentiment are likely to attract attention in the coming days, with the consumer sentiment report including readings on inflation expectations.
Despite staying weak until noon and suffering a setback after a subsequent recovery, U.S. stocks closed on a buoyant note on Tuesday thanks to strong buying at several counters.
The major averages all ended with impressive gains. The Dow ended higher by 265.67 points or 0.8 per cent at 34,156.69. The S&P 500 closed up 52.92 points or 1.3 per cent at 4,164.00, and the Nasdaq surged 226.34 points or 1.9 per cent to 12,113.79.
A positive reaction to Federal Reserve Chair Jerome Powell’s remarks at the Economic Club of Washington lifted the market.
In a Q&A session at the Economic Club of Washington, Powell told Carlyle Group co-founder David Rubenstein that he expects 2023 to be a year of “significant declines in inflation.”
Powell said inflation is beginning to ease, though he expects it to be a long process and cautioned that interest rates could rise more than markets expect if the economic data doesn’t cooperate.
“The disinflationary process, the process of getting inflation down, has begun, and it’s begun in the goods sector, which is about a quarter of our economy,” Powell said. “But it has a long way to go. These are the very early stages.”
Microsoft shares gained nearly 4 per cent. Boeing surged 3.8 per cent, and Chevron climbed 2.6 per cent.
Walt Disney, Merck, Travelers Companies, Apple, Intel, Salesforce.com, JP Morgan Chase, American Express, Goldman Sachs and Walgreens Boots Alliance also posted impressive gains.
Hertz climbed 7.5 per cent, and DuPont shares surged 7.8 per cent on stronger-than-expected results.
Verizon, Home Depot, P&G and Caterpillar ended weak. Chegg plunged more than 17 per cent after the company came out with disappointing guidance.
In economic news, data showed the US trade deficit widened to $67.4 billion in December 2022 from a downwardly revised $61.0 billion in November.
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