Market indices edge higher after Powell’s comments ward off investors’ fears

Wednesday witnessed the U.S. stock indexes closed higher, near-record territory after the Federal Reserve Chairman Jerome Powell’s comments on combating inflation reassured investors.

The Fed chief said the labor market, although improving, has a long way to go toward recovering from the pandemic, despite recent record-high job openings. Regarding inflation, Powell said it “has increased notably and will likely remain elevated in coming months before moderating.”

The Dow Jones Industrial Average was up 44.44 points, or 0.1%, ending at 34,933.23, while the S&P 500 index rose 5.09 points, or 0.1%, closing at 4,374.30. The Nasdaq Composite fell 32.70 points, or 0.2%, finishing at 14,644.95.

On the first of two days of testimony before the Congress, the Fed Chair Powell Wednesday talked about easing monetary policy, the state of the economy, skyrocketing U.S. home prices, and the ever-increasing cost of living. 

Powell elaborated that low-interest rates and a lack of supply contributed to the housing affordability crisis. He assured the audience that the “reckless” and “irresponsible lending” practices that led to the 2008 financial crisis “are not happening, at least so far.”

Powell’s comments followed data this week showing the highest increase in 13 years in U.S. consumer prices and the more-than-expected rise in U.S. producer prices.

Meanwhile, corporate earnings continued Wednesday, with BlackRock and Bank of America reporting revenue and profit that was better than forecast. However Bank of America did report reduced revenue and the increase in profits was attributed to the release of reserve funds for potential inflation, last year.

President Biden intends to rally Senate Democrats for a budget agreement that calls for spending $3.5 trillion on “human infrastructure,” efforts related to climate change, health care, and family service programs.