Fed Chair’s Comments Spawn Market Volatility

The Nasdaq Composite and S&P 500 indexes rose as much as 1.4% and 1.1%, respectively, during Powell’s interview

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Federal Reserve Chair Jerome Powell | Source: Federal Reserve (CC license)

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After a mixed trading session Tuesday, Federal Reserve Chair Jerome Powell sent markets clearly into the green. In his first public remarks since his post-FOMC press conference earlier this month, Powell set markets at ease during an appearance at the Economic Club in Washington, D.C. 

The Nasdaq Composite and S&P 500 indexes rose as much as 1.4% and 1.1%, respectively, during Powell’s interview with Carlyle Group co-founder David Rubenstein, where he discussed the latest “extraordinarily strong” jobs report and potential rate increases moving forward. 

“The disinflationary process, the process of getting inflation down, has begun,” Powell said. 

In terms of expectations for future interest rate decisions, Powell was tight lipped, noting that upcoming economic data will be a major influencing factor. 

“What we said at the [FOMC] meeting was we anticipate that ongoing rate increases would be appropriate,” Powell said. “All of these numbers we are throwing around here are contingent on upcoming data.” 

Tech stocks and crypto led Tuesday’s midday gains, with bitcoin (BTC) and ether (ETH) rallying as much as 1.7% and 2.5%, respectively, before both paring gains slightly. Still, Powell tried to set market expectations in check, reinforcing the sentiment that future numbers are going to be important going forward. 

“The reality is we’re going to react to the data,” Powell said. “So if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more than is priced in.”

Rubenstein also asked about the debt ceiling, an ongoing crisis in Congress that Powell also mentioned during his latest press conference following this month’s FOMC decision. 

“The debt limit is really something for the fiscal authorities to take care of,” he said, noting that Congress has only one way forward: Raise the debt ceiling. 

Powell suggested that he would not be entertaining the possibility of minting a trillion dollar coin

“As I said, this ends in only one way,” he added.


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