US stocks rise after Biden taps Powell for new Fed term
The Chairman of the U.S. Federal Reserve Jerome Powell speaks after President Joe Biden nominated Powell to a second term in the Eisenhower Executive Office Building in Washington, Nov. 22. EPA-Yonhap
Stocks were higher in afternoon trading on Wall Street Monday as investors head into a holiday-shortened week with reassurance about leadership at the Federal Reserve.
The SP 500 was up 0.6 percent as of 3:24 p.m. Eastern, on pace to close at an all-time high. The Dow Jones Industrial Average rose 284 points, or 0.8 percent, to 35,886, while the Nasdaq was hovering 0.2 percent below the record high it set on Friday.
Bond yields moved solidly higher. The yield on the 10-year Treasury rose to 1.63 percent from 1.54 percent late Friday. Banks, which rely on higher yields to charge more lucrative interest on loans, accounted for a big share of the gains for the broader market. Bank of America rose 2.7 percent.
Markets were reassured after President Joe Biden said he would nominate Jerome Powell for a second four-year term at the helm of the Federal Reserve, a vote of confidence in Powell's handling of central bank policies during the brutal disruptions caused by the coronavirus pandemic.
``Powell getting the nod is a sign that Biden is staying the course on monetary policy and the Fed is steadily moving toward normalizing policy,'' said Brad McMillan, chief investment officer for Commonwealth Financial Network. ``On the whole, the Fed is going to continue to be a force for monetary stability.''
The central bank is starting to trim bond purchases that have helped maintain low interest rates in an effort to support the economy and markets. The move to ease up on that support comes as rising inflation hangs over the economic recovery. Investors are closely watching the Fed to see whether pressure from rising inflation prompts it to speed up its plans for trimming bond purchases and raising its benchmark interest rate.
More than 70 percent of the stocks in the benchmark SP 500 rose. Companies that make household and personal care products made solid gains. Procter & Gamble rose 1 percent and Kroger rose 5.1 percent.
Energy companies moved higher along with the price of U.S. crude oil, which rose 0.9 percent. Chevron was up 2.6 percent.
The communications services sector was the only laggard among companies in the SP 500. Netflix slid 2.1 percent and Google's parent, Alphabet, fell 0.9 percent.
A mix of companies that rely on consumer spending also helped lift the market, though some big retailers fell. Target dropped 2.1 percent and Amazon fell 2 percent. Those retailers are on the cusp of the busy holiday shopping season, which traditionally kicks off right after the Thanksgiving holiday.
The dollar also strengthened against other currencies. The price of gold, a haven for when investors feel anxious, fell 2.4 percent.
Markets in Europe and Asia closed mixed as a resurgence of coronavirus outbreaks prompted some countries to look to stricter precautions to curb yet another wave of the pandemic.
Investors face a relatively light week of economic updates. The National Association of Realtors reported surprisingly good sales for previously occupied homes in October on Monday. The Commerce Department will report October data for new home sales on Wednesday, along with data on third-quarter gross domestic product.
Markets in the U.S. will be closed on Thursday for the Thanksgiving holiday. They will also close early on Friday. (AP)