S&P 500 Rallies as Powell Downplays Aggressive Fed Action Ahead

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S&P 500 Rallies as Powell Downplays Aggressive Fed Action Ahead
Credit: © Reuters.

By Yasin Ebrahim

Investing.com -- The S&P 500 closed higher Wednesday, as Federal Reserve Chairman Jerome Powell said the Fed would tread carefully in the wake of the Russia-Ukraine conflict, easing investor fears about aggressive Fed monetary policy tightening ahead. 

The S&P 500 rose 1.9%, the Dow Jones Industrial Average added 1.8%, or 595 points, the Nasdaq Composite gained 1.6%.

Powell said it was still “appropriate to raise interest rates by 25 basis points in March. The Fed chief, however, didn’t rule out the possibility of a 50 basis hike at subsequent meetings if inflation continued to run hot.

The United States 2-Year Treasury yield , which is sensitive to Fed rate changes, jumped more than 16%.

The backdrop of rising U.S. Treasury yields helped bank stocks pare some of their recent losses.

Signature Bank (NASDAQ: SBNY ), Comerica (NYSE: CMA ), SVB Financial (NASDAQ: SIVB ) jumped more than 6%.

Energy also racked up gains as U.S. oil prices jumped to their highest level since 2011 after OPEC and its allies showed little incentive to curb the surge in oil prices, sticking with plans to increase production by 400,000 barrels per day in April despite supply fears.

“The market appears to be increasingly pricing in an outage of Russian oil shipments. More and more Western oil companies are announcing their withdrawal from Russia,” Commerzbank said in a note.

The Russia invasion of Ukraine will remain in focus as both sides are set to discuss ceasefire at upcoming talks on Thursday.

The move from major oil producers to keep production steady comes just as U.S. oil inventories fell by a more than expected 2.6 million barrels for the week ended Feb. 25.

Tech stocks held firm even as U.S. Treasury yields climbed, with big tech and chip stocks leading to the upside.

Big tech including Apple (NASDAQ: AAPL ), Amazon (NASDAQ: AMZN ), Microsoft (NASDAQ: MSFT ) Alphabet (NASDAQ: GOOGL ), and Meta Platforms (NASDAQ: FB ) were in the green.

The earnings front also offered investors some solace, with Nordstrom and Salesforce posting strong-than-expected results.  

Salesforce (NYSE: CRM ) reported quarterly results that topped expectations and raised its full-year guidance pointing to healthy demand for digital transformation. Its shares closed less than 1% higher.

"[W]e believe further margin expansion into 2023 and the continued integration of Slack for Salesforce will ultimately be key for the Street looking forward," Wedbush said as it raised its price target on the stock to $315 to $275.

Nordstrom (NYSE: JWN ) rallied more than 37% after reporting fourth-quarter results that beat analysts' expectations and the department store retailer painted an upbeat picture about the year ahead.

In other news, Ford Motor Company (NYSE: F ) outlined plans to split its auto business into an electric vehicle unit and legacy gas and diesel unit, with the latter expected to serve as a cash engine to find the automaker's EV expansion. Its shares rose more than 8%.

On the economic front, labor market data showed that private payrolls in February grew by 475,000, beating estimates for 378,000. 

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