Wall Street starts December on the strength of Jerome Powell’s Fed assist, and after a decidedly positive month of November.
The Dow Jones gained 5.67% in November, while the S&P 500 was up 5.38%. For both US stock indexes, this is the second consecutive month of increases, the longest-lasting bullish phase for stock markets since August 2021.
The Nasdaq Composite jumped 4.37% for the month, also reporting its second consecutive month of gains, this time for the first time since three months of gains ended in December 2021.
Following the November rally, the Dow Jones is down since the start of 2022 by 4.81%; down also the S&P 500 and the Nasdaq, to a decidedly worse extent, with losses respectively equal to -14.39% and -26.70%.
Powell said yesterday at an event held at the Brookings Institute that “it makes sense to moderate the pace of interest rate hikes,” thus uttering the magic phrase that markets around the world have been waiting to hear: the intensity of the Federal Reserve’s monetary tightening, admitted the helmsman of the American central bank, “could be moderated as early as the next meeting of the FOMC (the monetary policy arm of the Federal Reserve)”, scheduled for the next 13 and 14 December.
Powell thus endorsed the speculation of the markets, which bet and are now betting more strongly on a lower monetary tightening, in December, equal to 50 basis points, compared to the four consecutive maxi rate hikes of 75 basis points, which brought the cost of US money to the record since 2008, or in the range between 3.75% and 4%.