New York: Wall Street stocks pushed to fresh records Friday, while the dollar sagged as Federal Reserve Chair Jerome Powell said there was no sign of an overheating economy and policymakers expected to continue gradual interest rate increases.
Speaking at the annual gathering of global central bankers in Jackson Hole, Wyoming, Powell said the US economy remained strong and anyone who wanted a job could find one.
He said prices were rising at about the Fed’s target pace of two percent, signaling the US central bank does not expect to accelerate interest rate increases as some investors have feared.
“We have seen no clear sign of an acceleration above two percent and there does not seem to be an elevated risk of overheating,” Powell said in prepared remarks.
“I am confident that the FOMC would resolutely ‘do whatever it takes’ should inflation expectations drift materially up or down or should crisis again threaten.”
The Fed seems to be “doing as good a job as they can not to overshoot” the tightening of monetary policy, said David Levy of Republic Wealth Advisors.
All three major US indices pushed higher, with the S&P 500 notching its first closing record since January and the Nasdaq jumping 0.9 percent to 7,945.98, smashing past a record set last month.
In Europe, London, Frankfurt and Paris all ended the day 0.2 percent higher.
But Powell’s remarks weighed on the dollar.
“Jerome Powell hit the dollar with a fairly dovish set of remarks at Jackson Hole,” said Neil Wilson of Markets.com said in a note to clients.
He said Powell’s speech indicated the Fed was flexible and didn’t want to choke off growth by raising rates too fast.
“The implication is that the Fed won’t be seeking to pre-emptively hike rates and the outlook for 2019 hikes now becomes more complicated.”
Australia’s dollar meanwhile pared losses and Sydney’s stock market closely slightly higher after the country’s governing Liberal Party elected a new business-friendly prime minister, ending a week of political uncertainty.
Sydney’s under-pressure S&P/ASX 200 fluctuated through the day and ended up 0.1 percent after the Liberals elected Scott Morrison as prime minister.
The former treasurer took the reins after beating hardliner Peter Dutton, who had moved to replace Malcolm Turnbull in a shock revolt earlier this week that sent Australian markets spinning.
– Key figures around 2040 GMT –
New York – Dow Jones: UP 0.5 percent at 25,790.35 (close)
New York – S&P 500: UP 0.6 percent at 2,874.69 (close)
New York – Nasdaq: UP 0.9 percent at 7,945.98 (close)
London – FTSE 100: UP 0.2 percent at 7,577.49 (close)
Frankfurt – DAX 30: UP 0.2 percent at 12,394.52 (close)
Paris – CAC 40: UP 0.2 percent at 5,432.50 (close)
EURO STOXX 50: UP 0.3 percent at 3,427.44 (close)
Tokyo – Nikkei 225: UP 0.9 percent at 22,601.77 (close)
Hong Kong – Hang Seng: DOWN 0.4 percent at 27,671.87 (close)
Shanghai – Composite: UP 0.2 percent at 2,729.43 (close)
Euro/dollar: UP at $1.1623 from $1.1540 at 2100 GMT
Pound/dollar: UP at $1.2847 from $1.2811
Dollar/yen: DOWN at 111.21 yen from 111.29 yen
Oil – Brent Crude: UP $1.09 at $75.82 per barrel
Oil – West Texas Intermediate: UP 89 cents at $68.72 per barrel