Powell gave the strongest indication that the Fed believes inflation is coming down but foresaw interest rates possibly going higher and staying high for longer. He warned that rates could go higher than the market expects.
The process of getting inflation down has begun, and it's beginning in the goods sector, Powell told the Economic Club in Wahington, DC, Tuesday. These are the very early stages of disinflation. Powell said that we're going to react to the data. If we continue to get strong labor market reports or higher inflation reports, it may be the case that we have to raise rates more than is priced in. Powell's comments were well received by the markets, although stocks were volatile before settling on firm ground.
Technology stocks led the charge, with the Nasdaq Composite surged 226.34 points or 1.90 percent to 12,113. The Dow Jones industrials increased 265.60 points or 0.78 percent to 34,156, or 265.60 points. The Standard and Poor's 500 rose 52.90 points or 1.29 percent to 4,163. The global financial markets were buzzing with activity after Powell made a statement on Tuesday, particularly in relation to foreign exchange rates. The euro to U.S. dollar exchange rate was at 1.07206, near the U.S. close Tuesday, with a slight dip of 0.08 percent from its opening value.
The British pound is currently at 1.20341, a 0.09 percent change from the U.S. dollar rate. The U.S. dollar to Japanese yen exchange rate decreased by 1.08 percent to 131.187. The Swiss franc rate dropped by 0.59 percent to 0.92263. The U.S. dollar to Canadian dollar exchange rate also fell by 0.23 percent to 1.34116, according to the U.S. dollar to Canadian dollar exchange rate.
The Australian dollar was up by 0.87 percent to 0.69443 on Tuesday, while the New Zealand dollar rose to 0.63162 as a result of the US dollar's exchange rate.
There were mixed results on global stock markets outside the U.S. Tuesday, with some major markets experiencing gains while others were experiencing losses.
The FTSE 100 Index in the United Kingdom closed at 0.36 percent, while the DAX Performance Index in Germany saw a decline of 0.16 percent. The CAC 40 index in Paris, France, had a small decrease of 0.07 percent.
In Asia, the Nikkei 225 Index of Japan saw a decline of 0.03 percent, while the Hang Seng Index in Hong Kong went up by 0.36 percent. The SSE Composite Index in China had a positive day, closing with a 0.29 percent increase. The Shenzhen Index saw gains of 0.12 percent.
Australia's S&P ASX 200 Index fell by 0.46 percent, while the ALL ORDINARIES Index saw losses of 0.42 percent. The KOSPI Composite Index in South Korea had a positive day, finishing up by 0.55 percent.
The S in India saw a decline of 0.37 percent, while the IDX Composite in Indonesia was strong, finishing up by 0.89 percent. The FTSE Bursa Malaysia KLCI saw losses of 0.95 percent, while the S&P NZX 50 Index Gross in New Zealand decreased by 0.56 percent.
It was a mixed day for global stock markets, with some indices showing improvement while others suffered losses. The investors will be watching the markets in the coming days to see if this trend continues.