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Wall Street climb as Powell signals no rush to end bond buying

While the cental bank's massive purchases of bonds to ease lending conditions were expected to end eventually, Powell's signal of no rush in doing so boosted sentiment.

August 27, 2021 / 08:26 PM IST
Wall Street, New York City (File image: Reuters)

Wall Street, New York City (File image: Reuters)

Wall Street was higher in early morning trading after Fed Chair Jerome Powell indicated the central bank could slow its massive asset purchase program by the end of the year.

The Federal Reserve leader's remarks released at 1400 GMT also indicated that he saw the US economy on track for a strong labor market as it bounces back from the Covid-19 pandemic.

Investors were keenly awaiting the comments at the Jackson Hole central banking symposium, as the central bank's easy money policies have played a role in indices' climb during the pandemic.

While the cental bank's massive purchases of bonds to ease lending conditions were expected to end eventually, Powell's signal of no rush in doing so boosted sentiment.

About 50 minutes into trading, the benchmark Dow Jones Industrial Average was up 0.6 percent at 35,428.26.

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The broad-based S&P 500 rose 0.7 percent to 4,502.07, and the tech-rich Nasdaq Composite Index rose 0.9 percent to 15,080.20.

Before markets opened, Commerce Department personal consumption expenditures (PCE) data showed prices rising 4.2 percent in July from the same month last year, a high rate that was even faster than the month prior.

Spending also dropped sharply from June in what analysts viewed as a consequence of the fast-spreading Delta variant of Covid-19 making some consumers hesitant.

"The key takeaway from the report is two-fold: the decline in real PCE will be a drag on third-quarter GDP forecasts and inflation pressures continue to run persistently high," Patrick J. O'Hare of Briefing.com said.

Among companies, apparel retailer Gap was up 0.7 percent after a positive earnings report on Thursday. Exercise equipment firm Peloton was down eight percent after announcing lackluster quarterly results.
AFP
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