US stocks gain as Fed signals it could soon cut rates

VIDEO: REUTERS
Traders work on the floor of the New York Stock Exchange as Federal Reserve chairman Jerome Powell holds a news conference on the television behind them.
Traders work on the floor of the New York Stock Exchange as Federal Reserve chairman Jerome Powell holds a news conference on the television behind them.PHOTO: REUTERS

NEW YORK (AFP) - Wall Street stocks finished somewhat higher on Wednesday (June 19) after the Federal Reserve signalled it could soon cut interest rates due to uncertainty over the economic outlook.

As expected, the Fed kept interest rates unchanged, but Fed chief Jerome Powell said many central bankers feel the case for an interest rate cut has "strengthened," noting that trade frictions with China have dimmed the growth outlook.

The Dow Jones Industrial Average ended at 26,504.00, up 0.2 per cent.

The broad-based S&P 500 gained 0.3 per cent to 2,926.46, while the tech-rich Nasdaq Composite Index advanced 0.4 per cent to 7,987.32.

In its statement, the Fed said it "will act as appropriate to sustain the expansion" and dropped prior wording that it would be "patient" in assessing economic data, an omission that boosted expectations in futures markets that the Fed will cut interest rates in July.

The more dovish statement followed up on a shift in tone from Powell on June 4. Over the ensuing period, the Dow has gained more than six percent.

Art Hogan, chief market strategist at National Securities, said the Fed's more dovish tilt was in line with expectations and largely priced in by financial markets.

 

The next big event will be the G20 meeting, which will provide a forum for US President Donald Trump and Chinese leader Xi Jinping to try to hash out a trade deal.

"Where we are now is back to focusing on trade and putting monetary policy on the backburner," Hogan told AFP.