Stocks rise as Powell cautious on stimulus withdrawal
Jerome Powell signaled the central bank could withdraw stimulus starting later in 2021
Stock markets jumped Friday after Federal Reserve Chair Jerome Powell took a cautious stance on a potential withdrawal of the central bank’s huge economic stimulus measures later this year.
Major Wall Street indices closed at records after Powell delivered his annual speech at the virtual Jackson Hole central banking symposium, while European trading ended positively after a quiet session.
Despite the impact of the fast-spreading Delta variant of Covid-19, Powell said the US economy has continued to recover and shown strong job growth.
His remarks came after some other Fed members had argued that the bank could taper its asset-buying scheme this year.
Powell’s comments were “interpreted by the market as the Fed Chair offering no fresh news, and people who had betted on him providing some clear tapering timeline were left disappointed,” Razaqzada said.
– US inflation climbs –
The personal consumption expenditures (PCE) price index — the Fed’s preferred measure of price increases — rose at a rapid 4.2 percent pace in July compared to the same month in 2020.
“While pandemic fatigue is setting in and leading to strong emotional responses, we believe cooler consumer spending growth is more likely than consumers retrenching and the economy going into reverse,” Lydia Boussour of Oxford Economics said.
The bombing, claimed by the Islamic State group, left scenes of carnage outside the airport where thousands of Afghans had massed, desperate to flee their country.
Meanwhile, oil prices, which have enjoyed a strong run this week after recent hefty selling, saw more big gains on Friday as traders bought into the view that the Delta variant’s spread will only delay the economic recovery and demand will continue to improve.
– Key figures around 2055 GMT –
New York – S&P 500: UP 0.9 percent at 4,509.37 (close)
London – FTSE 100: UP 0.3 percent at 7,148.01 (close)
Paris – CAC 40: UP 0.2 percent at 6,681.92 (close)
Shanghai – Composite: UP 0.6 percent at 3,522.16 (close)
Pound/dollar: UP at $1.3766 from $1.3700
Dollar/yen: DOWN at 109.82 yen from 110.09 yen
Brent North Sea crude: UP 2.2 percent at $72.66 per barrel
Originally published as Stocks rise as Powell cautious on stimulus withdrawal