Stocks hit their session lows Wednesday just as Federal Reserve Chair Jerome Powell began his testimony in front of Congress. However, the main indexes quickly rebounded and climbed higher into the close.
Speaking in front of the House Financial Services Committee, Powell stuck to his recent script, reiterating that the Fed needs more evidence that inflation is easing before rate cuts begin. "We are just being careful," the head of the central bank stated.
However, Powell did say that lowering the federal funds rate will "likely be appropriate" later this year if the Fed can see more proof that inflation is "moving sustainably" toward its 2% target.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Today's testimony "is a confirmation that the Fed is still seeing stubborn inflation as preventing an immediate rate cut," says Morgane Delledonne, head of investment strategy, Europe, at Global X.
Wall Street will now turn to the next jobs report, due out Friday morning, to give more hints about the Fed's next move. "However, unless the unemployment rate unexpectedly rises significantly, there is little chance for the report to shift the current Fed's view that they need to see confirmation that inflation is back to its 2% target before cutting rates," Delledonne adds.
Wednesday's jobs data points to strong labor market
Today's economic data underscored strength in the labor market. For one, the Job Openings and Labor Turnover Survey (JOLTS) showed job openings in January were little changed vs December, staying slightly below 9 million.
Additionally, data from ADP showed the U.S. added 140,000 private payrolls in February, up from January's revised 111,000.
"Job gains remain solid. Pay gains are trending lower but are still above inflation. In short, the labor market is dynamic, but doesn't tip the scales in terms of a Fed rate decision this year," said Nela Richardson, chief economist at ADP, in the report.
Indeed, according to CME Group's FedWatch Tool, futures traders are currently pricing in a 57% chance the first quarter-point rate cut will come at the Fed's June meeting, roughly in line with yesterday's reading.
NYCB stock goes on a wild ride
In single-stock news, New York Community Bancorp (NYCB) was down more than 45% at one point in intraday trading after the Wall Street Journal said the regional lender was considering a stock sale to bolster its finances. However, shares swung nearly 30% higher on news the bank received a $1 billion equity investment from a group that includes former Treasury Secretary Steven Mnuchin's Liberty Strategic Capital. NYCB ended the day up 7.5%, but remains 66% lower year-to-date.
The embattled bank stock's woes began in late January when the company posted a surprise quarterly loss and slashed its dividend due to an unexpected surge in loan-loss reserves related to the commercial real estate (CRE) market.
In today's congressional testimony, Chair Powell chimed in on the CRE market. While Powell admitted that challenges created by more folks working from home post-pandemic and higher interest rates are a "shock to the system" that will result in "losses by some banks," he also said that the challenges are "manageable."
Other notable movers Wednesday included Palantir Technologies (PLTR), which popped 9.9% after the data analytics firm inked a $178 million government contract, and Foot Locker (FL), which plunged 29.4% after athletic footwear retailer's disappointing earnings.
As for the main indexes, the Dow Jones Industrial Average rose 0.2% to 38,661, the S&P 500 gained 0.5% to 5,104, and the Nasdaq Composite added 0.6% to 16,031.
Related content
- The Reddit IPO Is Almost Here: Should You Buy Reddit Stock?
- As General Electric Sets Spin Off, Old GE Name Is Going Away
- Checking A Bag at Delta Will Now Cost You More
-
Stock Market Today: Dow Leads as UnitedHealth Stock PopsUnitedHealth was the best Dow Jones stock Monday on reports that Medicare Advantage payments could rise in 2026.
-
Earnings Season: Live Updates and CommentaryFourth-quarter earnings season is getting underway, and Wall Street is keeping a close eye on both results and guidance.
-
Stock Market Today: Dow Leads as UnitedHealth Stock Pops
UnitedHealth was the best Dow Jones stock Monday on reports that Medicare Advantage payments could rise in 2026.
-
How to Organize Your Financial Life (and Paperwork)To simplify the future for yourself and your heirs, put a financial contingency plan in place. The peace of mind you'll get is well worth the effort.
-
Financial Confidence? It's Just Good Planning, Boomers SayBaby Boomers may have hit the jackpot money-wise, but many attribute their wealth to financial planning and professional advice rather than good timing.
-
Will You Be Able to Afford Your Dream Retirement?You might need to save more than you think you do. Here are some expenses that might be larger than you expect, along with ways to ensure you save enough.
-
Three Steps to Simplify Paying Your Taxes in RetirementOnce you retire, how you pay some of your taxes can change. Here's how to get a handle on them so you don't run afoul of the IRS and face penalties.
-
More SECURE 2.0 Retirement Enhancements Kick in This YearSaving for retirement gets a boost with these SECURE 2.0 Act provisions that are starting in 2025.
-
Saving for Your Emergency Fund: As Easy as 1-3-6An emergency fund that can cover six months' worth of expenses is far easier to build if you focus on smaller goals at first.
-
Stock Market Today: Dow Slides 697 Points on Super-Hot Jobs DataWhen the December nonfarm payrolls report hit the tape, there was no question which way stocks would go at Friday's opening bell.
