Wall Street close: Bulls cheer accommodative conditions from Fed's Powell

US benchmarks rallied from session lows on Wednesday and ended higher thanks to a late turn-around in the Federal Reserve event whereby Fed Chairman, Jerome Powell, emphasised the need for higher inflation to warrant a move up in the interest rates. Consequently, the S&P 500 ended up 0.3% at 3,141.63 while the Dow Jones Industrial Average, or DJIA, added 30 points or 0.1%, to end near 27,911.30. The Nasdaq Composite ended 0.4% higher to close at 8,654.05.

While the Fed held interest rates have been held, the so-called dot plot did not signal further moves in 2020 and thus a hawkish spin on the event was first traded. However, Powell's repeat of the "We've just touched 2% core inflation to pick one measure, & then we've fallen back. So, I think we would need to see a really significant move up in inflation that's persistent before we would even consider raising rates to address inflation concerns," from the October 30 FOMC press conference in today's sounded-off the potential for financial conditions to stay accommodative for many years to come, which helped bolster sentiment on Wall Street.

US data in focus

Meanwhile, data beforehand showed that the US Consumer Price Index climbed 0.3% MoM in November, following on from the 0.4% rise in October. That brought the headline rate up to 2.1% y/y. Core CPI (ex-food and energy) rose 0.2% m/m, which saw annual core inflation steady at 2.3% y/y. Core has averaged 0.2% m/m over the past six months. Inflation is at target on this measure, supporting the Fed’s ‘on-hold’ stance.

DJIA levels