U.S. stock market on rollercoaster after mixed economic data and Powell’s speech

On Wednesday, November 30, U.S. Federal Reserve Chairman Jerome Powell confirmed that smaller interest rate increases are likely ahead even as he sees progress in the fight against inflation as largely inadequate. Echoing recent statements from other central bank officials and comments at the November Fed meeting, Powell said he sees the central bank in a position to reduce the size of rate hikes as soon as next month. “It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” he said in a speech at the Brookings Institution in Washington, DC. “The time for moderating the pace of rate increases may come as soon as the December meeting.” But Powell did caution the Fed may stay with restrictive policy for a long time before it ends its inflation fight. “Despite some promising developments, we have a long way to go in restoring price stability,” Powell said. Powell’s comments bolstered growing optimism among some investors that the Fed will deliver a smaller 0.5 percentage point rate hike at its next meeting after four consecutive 0.75 percentage point increases to tame high inflation. Wall Street applauded the remarks. The Dow Jones Industrial Average closed up 737 points, or 2.18%, to snap a three-session losing streak. Tech stocks fared even better, with the Nasdaq Composite roaring 4.41% higher. Earlier that day, the latest mixed economic data took a toll on the US major indexes. Government data showed the United States economy grew at 2.9 percent in the third quarter, annualized, better than the 2.6 percent figure in the prior estimate. But payroll firm ADP said private employers added just 127,000 jobs in November, much less than analysts expected and well below the level in October. Upon Wednesday's opening, stocks meandered near the flatline. The broad-based S&P 500 rose less than 0.1 percent to 3,959.06, the tech-rich Nasdaq Composite Index gained 0.4 percent to 11,025.43. About 15 minutes into trading, the Dow Jones Industrial Average was down 0.1 percent at 33,813.82. “The on-the-day equity market surge is in part a relief rally,” wrote Krishna Guha, head of global policy and central bank strategy at Evercore ISI. “Many investors feared the Fed chair would take a max hawkish sledgehammer to the recent easing of financial conditions ... That overhang has now gone.” ETB NEWS:Yi Pan, Meixing Ren Contributed to this article.