CNBC Daily Open: Powell’s speech was hawkish. Investors' mood was bullish

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U.S. stocks rallied connected Fed Chair Jerome Powell's speech, contempt Powell sounding hawkish tones. The crippled of chickenhearted betwixt the Fed and markets continues.

Despite immoderate hawkishness determination is successful Federal Reserve Chair Jerome Powell's words, it seems that markets — either successful a acceptable of optimism oregon misled by confirmation bias — volition ever prehend connected the astir dovish of his statements and tally with them. That's what happened past week aft Powell's property conference, erstwhile markets focused connected his acknowledgement that a "disinflationary process has started." It appears the aforesaid happening occurred Tuesday aft Powell's code successful Washington D.C.

Analysts awaited Powell's code with anxiety. Markets dropped the erstwhile time connected January's jobs report; they expected Powell to reassert the value of involvement complaint hikes connected the backmost of specified a beardown labour market. He unambiguously did truthful — and adjacent suggested that rates mightiness person to beryllium accrued beyond the presently people of 5% to 5.25%. "If we proceed to get, for example, beardown labour marketplace reports oregon higher ostentation reports, it whitethorn good beryllium the lawsuit that we person bash much and rise rates much than is priced in," Powell said.

Yet markets reacted buoyantly. The Nasdaq Composite was the biggest winner, gaining 1.9%. The S&P 500 roseate 1.29%, and the Dow Jones Industrial Average accrued 0.78%. Markets, particularly the tech-heavy Nasdaq, whitethorn person been cheering the motorboat of caller AI chatbots launched by Microsoft, Google and Baidu, which could perchance usher successful a tech boom. But it's conscionable arsenic apt that markets zoomed successful connected Powell's notation of disinflation. And so, contempt Powell's hawkish speech, investors were bullish. The crippled of chickenhearted continues.

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