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FLASH NEWS
Thursday, February 25, 2021

Nasdaq, S&P 500 Get better as Powell Testimony Echoes Dovish Fed

STOCK MARKET OUTLOOK: NASDAQ, S&P 500 CLAW BACK LOSSES AS FED CHAIR POWELL REITERATES ACCOMMODATIVE STANCE

  • Nasdaq, S&P 500 making an attempt to erase intraday draw back as traders race to purchase the dip
  • Federal Reserve Chair Powell helps calm market angst together with his congressional testimony
  • Powell echoes how the Fed stays dedicated to retaining situations accommodative

Fed Chair Jerome Powell is within the highlight proper now with markets tuned into his semi-annual congressional testimony. Shares confronted heavy promoting stress on the New York opening bell on Tuesday, however it seems that danger urge for food is recovering within the wake of Powell’s newest remarks. Fed Chair Powell pledged to the Senate banking committee how the FOMC stays dedicated to its dovish coverage stance.

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Particularly, Powell acknowledged how the Federal Reserve gained’t take away financial assist till each of its targets – most employment and inflation reasonably above 2% for a while – are met. Which means the Fed intends to proceed utilizing its full vary of instruments together with quantitative easing to the tune of at the least $120-billion a month. In response, Treasury yields and the US Greenback dropped whereas the Nasdaq and S&P 500 rebounded off session lows.

NASDAQ, S&P 500 INDEX PRICE CHART: 1-MINUTE TIME FRAME (23 FEB 2021 INTRADAY)

Nasdaq Price Chart with S&P 500 Index Overlaid Reaction to Fed Powell Testimony

Chart by @RichDvorakFX created utilizing TradingView

Powell deferred to touch upon the fiscal stimulus debate, however famous that the latest transfer increased in sovereign rates of interest displays higher progress expectations and extra confidence within the financial system. The pinnacle central banker doesn’t anticipate inflation to rise to troubling ranges, including that the danger of not offering sufficient assist to the financial system outweighs potential inflation danger.



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Change in Longs Shorts OI
Every day 9% -14% -5%
Weekly 38% -22% -2%

Fed Chair Powell additionally talked about how the covid vaccination rollout stands out as the only greatest coverage for the financial system and returning to regular. That every one stated, and in gentle of the greater than 60-million vaccine doses administered throughout the US, it appears most probably that the most recent pullback in equities will chalk as much as a mere consolidation relatively than a reversal of the broader bullish pattern.

Hold Studying – EUR/USD Outlook: US Greenback Eyes Fed Chair Powell, Stimulus

— Written by Wealthy Dvorak, Analyst for DailyFX.com

Join with @RichDvorakFX on Twitter for real-time market perception

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