Shares rose and the dollar wobbled on Wednesday after Federal Reserve Chair Jerome Powell’s comments were seen as dovish by the markets.
Powell said the U.S. economy is in a “good place” and that inflation is starting to ease. He also said that interest rates are likely to rise, but that the Fed’s accommodative monetary policy is likely to remain in place for some time.
Bonds attempted to sustain a post-Powell rally, but failed to do so. Stocks rose and the dollar slipped as investors took Powell’s comments as a sign that the Fed is not likely to raise interest rates in the near future.
The Dow Jones Industrial Average rose 0.9%, the S&P 500 gained 0.5%, and the Nasdaq Composite increased 0.2%.
The U.S. dollar index, which tracks the greenback against a basket of six major currencies, was down by 0.3%.
The positive sentiment in the markets was also driven by the news that the U.S. and China have agreed to a phase one trade deal. The agreement, which is expected to be signed in the coming weeks, will see China increase its purchases of U.S. goods and services and address intellectual property issues.
Overall, the markets are optimistic that the trade deal and Powell’s comments will help to support the global economy.
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