U.S. stocks close higher on Powell comments

NEW YORK, March 7 (Xinhua) -- U.S. stocks ended higher on Thursday, as Federal Reserve Chair Jerome Powell said he expected interest rate cuts to come this year.

The Dow Jones Industrial Average rose 130.30 points, or 0.34 percent, to 38,791.35. The S&P 500 added 52.60 points, or 1.03 percent, to 5,157.36, posting a record closing high. The Nasdaq Composite Index increased 241.83 points, or 1.51 percent, to 16,273.38.

Nine of the 11 primary S&P 500 sectors ended in green, with technology and communication services leading the gainers by going up 1.89 percent and 1.83 percent, respectively. Meanwhile, financials and real estate led the laggards by dropping 0.15 percent and 0.05 percent, respectively.

During his testimony before the House Financial Services Committee on Wednesday and the Senate Banking Committee on Thursday, Powell indicated an anticipation for interest rate reductions within the year. He reiterated this sentiment in both sessions, stating that cuts "can and will begin" in the current year. Powell emphasized that the Federal Reserve remains uncertain about achieving continued progress toward the 2 percent inflation target, indicating that interest rate cuts would only be considered when the central bank is confident in the trajectory toward this objective.

Powell "essentially left rate cuts on the table for this year. That's what markets wanted to hear," said Anthony Saglimbene, chief market strategist from Ameriprise Financial. "The market's also responding well to the employment data we've had so far this week. It adds to the narrative that we're starting to see employment slow but still solid."

In January, total U.S. consumer credit increased 19.5 billion U.S. dollars, compared to a modest gain of 919 million dollars in the previous month, as reported by the Federal Reserve on Thursday. This represents a growth rate of 4.7 percent annually, up from a 0.2 percent rise in December. The surge exceeded expectations, with economists anticipating an increase of 10 billion dollars in credit for January.

Market participants now redirect their focus toward the February jobs report on Friday, scrutinizing the data for insights into the current state of the labor market and its potential impact on economic trends and monetary policy decisions.