US stocks surged overnight as lifted by Fed Chair Jerome Powell’s comments, strong job report and Chinese easing. DOW, S&P 500 and NASDAQ all extended post-Christmas rebound and made new weekly high before closing strong. DOW rose 3.29%, S&P 500 rose 3.43% and NASDAQ rose 4.26%. Treasury yield also staged a strong come back with 10 year yield added 0.105 to 2.659.
In short, Powell pledged that Fed was “listening” to the markets after December’s volatility. And, “particularly with the muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves.” He also added that “we are always prepared to shift the stance of policy and to shift it significantly” if needed.
Separately, Cleveland Fed President Loretta Mester said in a Reuters interview that federal funds rate is close to neutral. She added, “we really need to be looking at the data and having the economy tell us, do we need to move more? Do we need to move more, faster? Can we wait?” She emphasized “We should take our time and assess … We may be where we need to be.”
