After swinging between gains and losses till a little past noon, U.S. stocks climbed higher and settled on a firm note on Tuesday.
Optimism surrounding China’s reopening helped offset concerns about interest rates.
Although China’s decision to reopen its businesses has raised some optimism about the growth prospects for the country’s economy, reports showing a surge in Covid cases in Henan, the country’s third-most populous province, fueled concerns about the dreaded infection, and rendered the mood cautious early on in the session.
San Francisco Fed president Mary Daly said she expects interest rates to rise beyond 5 percent this year. Atlanta Fed president Raphael Bostic also said interest rates need to be raised above 5 percent.
In his first public appearance of the year, Powell said at a forum sponsored by the Swedish central bank that the Fed’s independence is essential for it to battle inflation.
Recent comments by other Fed officials have supported the view that the central bank needs to remain aggressive in raising interest rates to control inflation. Fed Governor Michelle Bowman said on Tuesday the bank will have to raise interest rates further to combat high inflation.
“Everybody hangs on every word from the Fed,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. Powell “didn’t really say anything” about policy, he added.
The major averages all ended with strong gains. The Dow ended higher by 186.45 points or 0.56 percent at 33,704.10. The S&P 500 settled at 3,919.25, up 27.16 points or 0.7 percent from the previous close. The Nasdaq climbed 106.98 points or 1.01 percent to settle at 10,742.63.
Caterpillar climbed 1.6 percent. Verizon, Visa, Goldman Sachs, Amgen, Travelers Companies, 3M, and American Express gained 1 to 1.5 percent, RTTNews cited.
Warner Bros. shares climbed more than 8 percent following a rating upgrade by Bank of America.
Shares of Bed Bath & Beyond Inc. skyrocketed more than 27 percent despite the company reporting a wider than expected fiscal third-quarter loss.
In overseas trading, Asian stocks ended on a mixed note Tuesday, with hawkish remarks from two Federal Reserve officials and fears of a coming recession weighing on markets. Investors also looked ahead to U.S. inflation data due this week.
European stocks closed lower on Tuesday as concerns about interest rate hikes resurfaced after some Fed officials said the U.S. central bank needs to raise interest rate beyond 5 percent and hold it at higher levels for a longer duration in order to rein in inflation.
