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US stocks rise as Powell says inflation is falling, but warns of higher interest rates

Jerome PowellJerome Powell.

Joshua Roberts/Reuters

  • US stocks rose in a volatile trading session on Tuesday after Powell reiterated that inflation was falling.
  • Investors also shrugged off Powell’s warning that interest rates could rise, with all three stock indexes ending the day higher.
  • The Fed chair said last week the economy was beginning to see disinflation.

US stocks moved upwards in a volatile trading session on Tuesday as Fed Chair Jerome Powell reiterated his view that inflation was falling.

Stocks jumped shortly after the remarks at the Economic Club of Washington, but then fell mid-afternoon as he warned interest rates would likely rise higher. Stocks then whipsawed before the end of the day, with all three benchmark indexes finishing solidly in positive territory.

“We will likely need to do additional rate increases,” Powell said, adding that the Fed would implement more hawkish policy if the labor market remains strong or if inflation stays high. Additionally, he believes the disinflation process would take “a significant period of time.”

For now, markets are pricing in a 25-basis-point rate hike at the Fed’s next meeting in March, followed by another 25-basis-point hike in May, according to the CME FedWatch Tool.

Here’s where US indexes stood at the 4 p.m. market close on Tuesday: 

Here’s what else is going on: 

In commodities, bonds, and crypto: 

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