(RTTNews) – After coming under pressure early in the session, stocks have shown a significant turnaround over the course of morning trading on Wednesday. The major averages have bounced well off their lows of the session and into positive territory.
The major averages have seen further upside in recent trading, reaching new highs for the session. The Dow is up 141.60 points or 0.5 percent at 30,671.85, the Nasdaq is up 132.07 points or 1.2 percent at 11,201.37 and the S&P 500 is up 26.31 points or 0.7 percent at 3,791.10.
The rebound on Wall Street comes as traders react to Federal Reserve Chair Jerome Powell’s testimony before the Senate Banking Committee.
In prepared remarks, Powell indicated the Fed plans to continue moving expeditiously to combat inflation but argued the U.S. economy is strong enough to handle tighter monetary policy.
Powell said the pace of future interest rate hikes will be dependent on incoming data and the evolving outlook for the economy and suggested the Fed will need to see “compelling evidence” that inflation is slowing before it begins to scale back its monetary policy tightening plans.
“We will make our decisions meeting by meeting, and we will continue to communicate our thinking as clearly as possible,” Powell said. “Our overarching focus is using our tools to bring inflation back down to our 2 percent goal and to keep longer-term inflation expectations well anchored.”
The Fed Chief said the central bank will still strive to “avoid adding uncertainty in what is already an extraordinarily challenging and uncertain time.”
“The opening statement from Fed Chair Jerome Powell ahead of his Semi-annual testimony to the Senate Banking Committee this morning added little to what he said in last week’s post-FOMC press conference,” said Michael Pearce, Senior US Economist at Capital Economics.
He added, “But his continued emphasis on the need for ‘compelling’ evidence that inflation is falling suggests officials will repeat last week’s larger 75bp hike at the next FOMC meeting in July.”
Biotechnology stocks have shown a strong move to the upside over the course of the morning, driving the NYSE Arca Biotechnology Index up by 1.8 percent.
Considerable strength has also emerged among housing stocks, as reflected by the 1.5 percent gain being posted by the Philadelphia Housing Sector Index.
Healthcare, pharmaceutical and commercial real estate stocks have also moved notably higher, while energy stocks continue to see substantial weakness amid a steep drop by the price of crude oil.
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index fell by 0.4 percent, while China’s Shanghai Composite Index slumped by 1.2 percent.
Meanwhile, European stocks have climbed off their worst levels of the day but remain in the red. While the German DAX Index is down by 1.1 percent, the U.K.’s FTSE 100 Index is down by 0.9 percent and the French CAC 40 Index is down by 0.7 percent.
In the bond market, treasuries have moved sharply higher, more than offsetting the pullback seen on Tuesday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 15.6 basis points at 3.151 percent.