Markets Rally after Strong Jobs Report, Powell's Vow to Be 'Patient' with Policy

January 4, 2019

By Chloe Aiello

Markets soared on Friday ー the Dow Jones Industrial Average closing the day up close to 750 pointsーfollowing comments by Fed Chair Jerome Powell on monetary policy and reports that the jobs market is not slowing.

The tech-heavy Cheddar 50 Index, which measures the performance of Cheddar's 50 top companies ー from Apple ($AAPL) to GM ($GM) ー gained 5.4 percent on Friday, amid broader market gains. The index's top performers were Roku ($ROKU), and Square ($SQ), which climbed more than 10 percent each.

Meanwhile, the Dow spiked 3.3 percent, or 747 points on Friday. The S&P 500 gained 3.4 percent while the Nasdaq also crossed into positive territory, up 4.3 percent. Technology stocks have recently been a laggard to major indices, but Friday saw the entire sector higher, with names like Netflix ($NFLX), Amazon ($AMZN), Google-parent Alphabet ($GOOGL), Facebook ($FB) and even Apple ($AAPL) all closing up more than 4 percent.

The broader market gains follow comments by the Fed Chair at the American Economic Association's annual meeting in Atlanta. Alongside past Fed chairs Janet Yellen and Ben Bernanke, Powell reiterated much of what he has said in the past few months concerning monetary policy.

"As always, there is no preset path for policy," Powell said, according to CNBC. "And particularly with muted inflation readings that we've seen coming in, we will be patient as we watch to see how the economy evolves."

He also added that the Fed was prepared to adjust its approach to interest rate hikes should that policy appear to cause problems with the economy. The Fed said in December it anticipated raising rates twice in 2019.

A strong jobs report from the Bureau of Labor Statistics also likely quelled some fears that the U.S. is part of a broader economic deceleration.

Nonfarm payroll jobs climbed by 312,000 in December, and unemployment climbed 0.2 percent to 3.9 percent, which is still lower than the 4.1 percent unemployment rate the Bureau reported last December.

The Federal Reserve is responsible for establishing interest rates, or the cost of borrowing money. The higher the interest rate, the greater the cost to pay off credit. Higher rates can put downward pressure on the economy, but often combat inflation. President Trump has been a vocal critic of the Fed's rate hikes ー and of Powell personally, going so far as to say in a December interview he was "not even a little bit happy with my selection of Jay" as Fed Chair.

When asked about President Trump on Friday, Powell said he would not resign if asked by the president.

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