Major U.S. stock indexes edged higher in midday trading Wednesday after the chairman of the Federal Reserve told lawmakers that the central bank is likely to hold off on another interest rate cut, unless the economy shows signs of worsening.
Fed Chairman Jerome Powell also expressed optimism about the prospects for the U.S. economy, which he expects will grow at a solid pace, though it still faces risks from slower global growth and trade tensions.
Stocks came off their lows from a slightly lower open after Powell’s remarks, which kicked off two days of testimony by the Fed chief before congressional panels.
Makers of household goods, utilities and real estate companies, sectors seen as less risky, led the gainers. Procter & Gamble rose 1.1%, Edison International gained 1.9% and American Tower added 1.7%.
Banks fell the most as bond prices rose, dragging down the yields used to set interest rates that lenders charge on mortgages and other loans. Bank of America dropped 1.1% and Wells Fargo fell 1%.
Companies that rely on consumer spending also fell. Amazon was down 0.9% and General Motors slid 1.8%. Bond prices and gold rose.
Meanwhile, a published report in The Wall Street Journal Wednesday cast fresh doubts about a so-called phase-one trade deal between the U.S. and China. The report, which cited unnamed sources, highlighted that Washington and Beijing are at odds over whether the U.S. will roll back tariffs or merely hold off on going through with a new batch of taxes on Chinese goods due to go into effect on Dec. 15.
President Donald Trump said Tuesday that an agreement on the phase one deal announced last month “could happen soon,” but he warned that he was ready to raise tariffs “very substantially” if that fails.
Investors’ expectations about a stopgap trade deal between the world’s two largest economies has helped drive gains for the stock market the past five weeks. Federal Reserve interest rate cuts, data showing the economy is still growing solidly and better-than-expected corporate earnings reports have also helped lift the market.
KEEPING SCORE: The S&P 500 was up 0.1% as of 12:13 p.m. Eastern Time. The index set a record high on Friday.
The Dow Jones Industrial Average gained 37 points, or 0.1%, to 27,729. The Nasdaq added less than 0.1%. It hit an all-time high on Tuesday.
Small-company stocks lagged the broader market, sending the Russell 2000 index 0.4% lower.
More stocks fell than rose on the New York Stock Exchange. Stock indexes in Europe were broadly lower.
POWELL SPEAKS: In a written statement to Congress’ Joint Economic Committee, Powell said Wednesday that the central bank is unlikely to cut rates unless the economy slows enough to cause Fed policymakers to make a “material reassessment” of their outlook.
The Fed cut short-term rates last month for the third time this year, to a range of 1.5% to 1.75%. The central bank has lowered rates to shield the economy from slower global growth and the U.S.-China trade war.
Recent data suggests that U.S. economic growth remains solid, if not spectacular. The economy expanded at a 1.9% annual rate in the July-September quarter, down from 3.1% in the first three months of the year. The unemployment rate is near a 50-year low of 3.6% and hiring is strong enough to potentially push the rate even lower.
YIELDS: Treasury yields continued to fall as demand for bonds increased, driving their prices higher. The yield on the 10-year Treasury note slipped to 1.88% from 1.91% late Friday. It was below 1.50% in early September and has been rallying with confidence in the economy’s strength.
MILESTONES APLENTY: Even with the weak start for the markets Wednesday, stocks are once again flirting with more milestones.
The benchmark S&P 500, which has notched weekly highs the past five weeks, has hit new highs 19 times this year, matching 2018’s milestones. The index’s tiny gain Wednesday had it on track for its second record high in four days.
The Nasdaq, meanwhile, was hovering just above the all-time high it set Tuesday.
The Dow, which ended Tuesday unchanged from its record high set the previous day, was also heading toward a new milestone Wednesday.
FEELING SECURE: Home and business security company ADT climbed 5.8% after its latest quarterly results topped Wall Street’s expectations. The company also announced a special dividend.
ANALYZE THIS: Datadog vaulted 16% after the data analytics and cloud monitoring company reported strong third-quarter earnings and gave investors an encouraging forecast.
QUITE A JOLT: Shares in Energizer Holdings jumped 13.1% after the battery and personal care products maker’s latest quarterly results handily beat Wall Street’s forecasts.