Stocks Climb After Powell’s Inflation Reassurance: Markets Wrap

(Bloomberg) -- Stocks climbed after Federal Reserve Chair Jerome Powell reiterated his views that inflation pressures will be transitory even after a notable increase in recent months. The dollar fell.

The S&P 500 extended gains into a second day as the Fed chief said he’s got “a level of confidence” that prices will eventually come down, while noting that it would be “very, very unlikely” to see the kind of 1970s-style inflation. In a testimony to the House Select Subcommittee Tuesday, Powell also said that a 5% inflation environment wouldn’t be acceptable, and urged patience at evaluating data on prices.

Read: Powell Plays Down Inflation Though Prices Higher Than Expected

“So inflation is larger than they expected,” said Art Hogan, chief strategist at National Securities. “That part is true. But the part about that’s going to force their hand faster than we think is the part that he’s pushing back on. I think markets have calmed down about that.”

Earlier Tuesday, New York Fed President John Williams noted that a discussion about raising interest rates is still “way off in the future.” Meantime, his Cleveland counterpart Loretta Mester said very low rates for a long period of time and unconventional policy tools such as asset purchases can lead to too much risk-taking and financial-stability issues.

Elsewhere, Bitcoin rebounded after earlier tumbling below $30,000 for the first time since January. Oil fell with reports that Russia and other OPEC+ nations are considering raising production in the wake of a tightly-supplied global crude market.

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Here are some events to watch this week:

• U.S. new home sales, current account balance on Wednesday
• EIA crude oil inventory report due Wednesday
• Bank of England interest rate decision Thursday
• The Fed releases Thursday the results of stress tests on the largest U.S. banks

These are some of the main moves in financial markets:

Stocks

• The S&P 500 rose 0.5% as of 4 p.m. New York time
• The Nasdaq 100 rose 0.9%
• The Dow Jones Industrial Average rose 0.2%
• The MSCI World index rose 0.5%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro rose 0.2% to $1.1940
• The British pound rose 0.1% to $1.3948
• The Japanese yen fell 0.4% to 110.66 per dollar

Bonds

• The yield on 10-year Treasuries declined three basis points to 1.46%
• Germany’s 10-year yield was little changed at -0.16%
• Britain’s 10-year yield advanced one basis point to 0.78%

Commodities

• West Texas Intermediate crude fell 0.3% to $72.87 a barrel
• Gold futures fell 0.3% to $1,777.10 an ounce

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