Wall Street rallies on hopes of Fed policy pause
For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window
Jobless claims remain low, new home sales rise
Block Inc slides after Hindenburg discloses short position
US SEC threatens to sue Coinbase, shares drop
Regional banks head lower
Indexes up: Dow 0.44%, S&P 0.66%, Nasdaq 1.30%
New throughout, adds NEW YORK dateline, changes byline
By Stephen Culp
NEW YORK, March 23 (Reuters) -Wall Street advanced on Thursday as market participants looked past remarks by U.S. Federal Reserve Chairman Jerome Powell on Wednesday and weighed the possibility that the central bank will pause its restrictive interest rate hikes in the near future.
All three indexes marked the three-year anniversary of the nadir of the COVID-19 crash by heading higher, with megacap growth stocks, led by Microsoft MSFT.O and Apple Inc AAPL.O, providing the most upside muscle and putting the tech-heavy Nasdaq out front.
"Today the market is bouncing back on what was a dovish Fed hike yesterday," said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky. "Powell did a good job sticking to the party line on inflation and continued to jawbone hawkish even though the hike leaned dovish."
"It’s not too crazy for markets to see that pivot in the near future," Mayfield added.
The risk-on session reversed Wednesday's late-session sell-off after the Fed's rate hike, Powell's subsequent Q&A session and Treasury Secretary Janet Yellen's testimony before congress in which she ruled out blanket protection for all deposits.
In view of recent turmoil in the financial sector, which began with the failures of SVB Financial Group SIVB.O and Signature Bank SBNY.O, worries that the Fed was overtightening and pushing the economy perilously close to recession, Powell's reiterance of the Fed's determination to cool inflation sparked a late session flight to safety.
Jitters among regional banks persist, with the KBW Regional Bank index .KRX sliding 2.3%.
Comments from the Bank of England that inflation will probably quickly fade also helped fuel hopes of light at the end of the central bank tightening tunnel.
The BoE's commentary "paints a picture of a global central banking system that's ready to slow the pace of their hiking," Mayfield said.
But economic data released on Thursday showed jobless claims inching lower and new home sales posting a surprise gain, providing fresh evidence that the economy is yet to show the kind of softening that would lend itself to cooling inflation.
The Dow Jones Industrial Average .DJI rose 142.01 points, or 0.44%, to 32,172.12, the S&P 500 .SPX gained 26.11 points, or 0.66%, to 3,963.08 and the Nasdaq Composite .IXIC added 151.81 points, or 1.3%, to 11,821.77.
Among the 11 sectors of the S&P 500, communication services .SPLRCL and tech .SPLRCT led the percentage gainers.
First Republic Bank FRC.N dropped 8.6% in volatile trading in the wake of Yellen's testimony.
Chipmaker Nvidia Corp NVDA.O advanced 2.2% after Needham raised its price target.
Block Inc SQ.N shares slid 14.6% after Hindenburg Research disclosed its short positions in the company.
Crypto exchange Coinbase Global Inc COIN.O dropped 14.0% in the wake of the U.S. Securities and Exchange Commission's threat to sue the company.
Accenture ACN.N surged 7.1% after it announced plans to cut about 2.5% of its workforce.
Advancing issues outnumbered declining ones on the NYSE by a 1.11-to-1 ratio; on Nasdaq, a 1.13-to-1 ratio favored advancers.
The S&P 500 posted four new 52-week highs and 14 new lows; the Nasdaq Composite recorded 45 new highs and 197 new lows.
Reporting by Stephen Culp; Additional reporting by Amruta Khandekar and Ankika Biswas in Bengaluru
Editing by Marguerita Choy
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.