Dow Jones Rises; FED Won't Tighten Even with A Strong Labor Market
The DOW plowed higher, boosted by gains in energy stocks, unwinding the red in consumer stocks. It pushed the Dow Jones to a record close on Wednesday. These gains coincided with the FED chairman's assertion that the economy still needs an accommodative monetary environment. At the same time, investors are sizing up the wave of the latest corporate earnings reports.
Gains in the stock market and progress towards a record intervention from the Federal Reserve uncharacteristically coincided with news of low inflation. In his statement, Jerome Powell said that even if there are concerns that consumer prices will rise in the medium term, it won't be for long. News of stable inflation further pointed to how misplaced analysts are on inflation, giving room for the FED boss to bat off higher inflation claims. He added that even if the labor market is strong and the economy returns to full employment, the FED won't tighten. The stock market, specifically Dow Jones, ticked higher on these comments with an additional boost from rising oil prices.
Impact on the DOW:
Bullish. Inflation is tame, and even if consumer prices rise, the FED projects higher prices won't be unsustainable. Consequently, the central bank calls for more fiscal support and an accommodative monetary policy, a boost for the stock market.
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