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Fed-speak sparks Dow rally

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Fed-speak sparks Dow rally

Fears of a Dow sell-off after Friday’s weak reading on March job creation gave way to more market-friendly talk from the Federal Reserve and a 170-point gain for the Dow. Wall Street shrugged off the weak March jobs report, which was released Friday when the stock market was closed for Easter, and drove stocks sharply higher Monday amid a growing sense that the Fed will push back its first rate hike to sometime in the third quarter or perhaps later. Prior to the jobs report, most Wall Street pros expected the first hike in June or July.Federal Reserve Building

Around 1:30 p.m. ET, the Dow Jones industrial average was up 172 points, or 1%, to 17936. Wall Street is now betting on a later “lift off” date for the first rate hike due to the recent soft patch in the economy and job market caused by brutal winter weather, the sharp drop in U.S. crude prices and the negative fallout from the rising dollar on big U.S. companies that do a lot of business abroad.

“For those investors worried over a possible June interest rate hike, the weak March jobs data will go a long way toward dispelling that notion,” William Lynch, director of investments at Hinsdale Associates, told clients in a note. “The overall softness of recent economic data coupled with the disappointing employment report last week have led many to believe that a rate hike may not happen until the end of the year or even later.”

New York Fed President William Dudley also expressed concern that the recent economic turbulence could impact when and if the Fed moves. Dudley’s comments were perceived as “dovish” — or a sign rates would stay lower for longer. A dovish Fed is viewed bullishly by Wall Street at the moment.

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