Wall Street Opens Higher as Powell Flags Easier Money; Dow up 116 Pts By Investing.com


© Reuters.

By Geoffrey Smith 

Investing.com — U.S. stock markets opened higher after Federal Reserve Chairman Jerome Powell laid out a change in the central bank’s approach to policy-making that is likely to rule out any hike in interest rates for some years. 

By 9:35 AM ET (1335 GMT), the was up 116 points, or 0.4%, at 28,448 points. The S&P 500 was up 0.2% and the , after a series of record highs, was lagging slightly, falling less than 0.1%.

““The Committee seeks to achieve inflation that averages 2% over time, and therefore judges that, following periods when inflation has been running persistently below 2%, appropriate monetary policy will likely aim to achieve inflation immediately above 2% for some time,” The Fed said in an accompanying statement. 

Analysts welcomed the move, which acknowledges the trouble the Fed has had in getting inflation up to the level that aligns best with its other goal, full employment. However, it now puts an extra onus on the central bank to achieve its goals.

 

“Simply making promises to allow future overshoots, via average inflation or price level-targeting, won’t count for much without a shift in the current policy approach, so that markets can think that higher inflation is more

likely,” said Ian Shepherdson, chief economist with Pantheon Macroeconomics. 

 

Microsoft (NASDAQ:) stock hit an all-time high, rising 2.2% after CNBC reported that it could wrap up the acquisition of TikTok’s U.S. operations within the next two days. 

 

Some of the biggest gainers from Powell’s comments were beaten-down travel stocks who have had to borrow heavily to shore up their liquidity as the pandemic hit their cash flow. United Airlines (NASDAQ:) stock was up 9.1%,  American Airlines (NASDAQ:) stock was up 7.8%, and Southwest stock (NYSE:) and Delta Air Lines (NYSE:) stock rose just under 6%. Cruise operators also made big gain, with Norwegian Cruise Line (NYSE:) stock rising 9.2%, Royal Caribbean (NYSE:) stock up 6.4%, and Carnival (NYSE:) stock rising 7.6%.

 

On Wednesday, Carnival had confirmed that it would extend the suspension of some sailings through the first half of 2021, due to the pandemic.

The pandemic was also behind Abbott Laboratories ‘s (NYSE:) 7.7% rise, after the Food and Drug Administration gave Emergency Use Authorization to its Covid-19 rapid testing kit. 

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