By Stephen Culp
NEW YORK (Reuters) - Wall Street extended its gains on Wednesday after Federal Reserve Chair Jerome Powell said that the central bank's policy rate was "just below" neutral, hinting at a potential moderation in the pace of policy tightening.
The S&P 500 was up 1.9 percent, while the Dow and the Nasdaq each advanced more than 2 percent following Powell's speech to the Economic Club of New York.
In his remarks, Powell said that while "there was a great deal to like" about U.S. prospects, "our gradual pace of raising interest rates has been an exercise in balancing risks."
Earlier in the day, in its first-ever financial stability report, the Fed cautioned that trade tensions, Brexit, and troubled emerging markets could rock a U.S. financial system where asset prices are "elevated."
This comes on the heels of President Donald Trump's latest attack on the central bank, saying in an interview on Tuesday that the Fed "is way off-base with what they're doing."
"(Powell) gave the market, and presumably President Trump, exactly what he wanted, which was an admission that the previously proposed path of future rate hikes was probably too aggressive," said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York.
"Powell saying we're 'close to neutral' is a pretty good indication of what's to come," Pursche added.
The U.S. Commerce Department affirmed that U.S. GDP
The Dow Jones Industrial Average <.DJI> rose 539.18 points, or 2.18 percent, to 25,287.91, the S&P 500 <.SPX> gained 49.69 points, or 1.85 percent, to 2,731.86 and the Nasdaq Composite <.IXIC> added 165.49 points, or 2.34 percent, to 7,248.19.
Of the 11 major sectors in the S&P 500, all but utilities <.SPLRCU> were positive. Technology <.SPLRCT>, consumer discretionary <.SPLRCD> healthcare <.SPXHC> and industrials <.SPLRCI> were the biggest percentage gainers, each up more than 2 percent.
The S&P 500 Automobile & Components index <.SPLRCAU> was up 0.9 percent after President Trump said he was studying new auto tariffs in the wake of General Motors Co's
Meanwhile, GM stock has given up its gains since announcing its restructuring.
Health insurer Humana Inc
Among losers, Tiffany & Co
Advancing issues outnumbered declining ones on the NYSE by a 3.96-to-1 ratio; on Nasdaq, a 3.57-to-1 ratio favoured advancers.
The S&P 500 posted 15 new 52-week highs and 5 new lows; the Nasdaq Composite recorded 29 new highs and 113 new lows.
(Reporting by Stephen Culp; additional reporting by Noel Randewich; Editing by Nick Zieminski)
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Updated Date: Nov 29, 2018 02:05:23 IST