US close: Dow surges as Powell signals Fed willingness to ease monetary policy
Wall Street stocks recorded their second best day of the year on Tuesday, as market focus shifted from trade concerns to monetary policy when Fed chair Jerome Powell signalled the central would be open to easing monetary policy in order to save the economy.
At the close, the Dow Jones Industrial Average was up 2.06% at 25,331.23, while the S&P 500 closed 2.14% higher at 2,803.22 and the Nasdaq gained 2.65% to 7,527.12.
The Dow closed 511 points higher on Tuesday after recording just a four-point gain in the previous session which also saw the tech-laden Nasdaq Composite enter correction territory after investors grew worried about stricter regulations being slapped on the likes of Alphabet, Apple, Amazon and Facebook.
In Fed action, Chair Jerome Powell said the central bank would "act as appropriate to sustain the expansion".
However, he added that the Fed did not know "how or when" global trade issues would be resolved. "We are closely monitoring the implications of these developments for the US economic outlook."
Earlier, Chicago Fed President Charles Evans said that the US economy was continuing to perform well, but he expressed concern about low levels of inflation.
In an interview with CNBC, Evans said the fundamentals of the US economy remained solid. He also said he was "a little nervous" that inflation was under-running the Federal Reserve's 2% objective.
In trade news, China's Ministry of Commerce said on Tuesday that its trade conflict with the US could only be resolved through further talks.
"It is hoped that the US will abandon its wrong practices and work in tandem with the Chinese side. In the spirit of mutual respect, equality and mutual benefit, we will control differences and strengthen cooperation to jointly safeguard the healthy and stable development of China-US economic and trade relations," a spokesperson from the Ministry of Commerce said.
However, in response, Washington accused Beijing of playing the "blame game" by misrepresenting why trade talks between the two powers had broken down.
"Our negotiating positions have been consistent throughout these talks, and China backpedalled on important elements of what the parties had agreed to," read a statement from the Office of the United States Trade Representative.
Turning attention south of the border, Mexican Foreign Minister Marcelo Ebrard said on Tuesday that he was anticipating that the US and Mexico would find common ground on immigration and trade.
The 10-year Treasury note yield rose, after plumbing its lowest level in more than a year-and-a-half just the day before.
West Texas Intermediate and Brent Crude were trading 0.47% and 1.14% firmer, respectively, while gold spot prices were up 0.14%.
The USD was down 0.38% against the Sterling at 0.7866.
On the data front, new orders for American-made manufactured goods fell in April with shipments falling by the most in two years, pointing to continued weakness in factory activity.
Factory goods orders declined 0.8%, dragged down by weaker demand for transportation equipment, primary metal, computers and electronic orders, according to the Commerce Department. Data for March meanwhile was revised down to show factory orders increasing 1.3% instead of the previously reported 1.9% surge.
In corporate news, Cracker Barrel shares closed 3.62% higher after the company topped third-quarter profit estimates, while jeweller Tiffany & Co's stock gained 2.61% in the session despite experiencing a currency squeeze in its first quarter.
Uber shares saw the session out 3.61% firmer after analysts at Bank of America Merrill Lynch initiated coverage on the ridesharing firm at 'buy'.
Bank shares also rose broadly, with Citigroup, Morgan Stanley and Bank of America all closing more than 4% higher and Goldman Sachs and JP Morgan Chase recording gains of 3.65% and 3.10%, respectively.