After experiencing a notable decline early in the week, stocks predominantly rose during Wednesday's trading. However, the major averages are still significantly below their recent record highs.
Despite not reaching their session highs, the major averages finished the day positively. The Nasdaq increased by 91.95 points or 0.6 percent to 16,031.54, the S&P 500 ascended by 26.1 points or 0.5 percent to 5,104.76, and the Dow increased marginally by 75.86 points or 0.2 percent to 38,661.05.
The resurgence on Wall Street is partly attributed to the positive response to the congressional testimony by Federal Reserve Chair Jerome Powell.
In his testimony, Powell conveyed to the House Financial Services Committee that it may be suitable for the Fed to begin reducing interest rates at some point this year. However, he emphasized the need for greater confidence that inflation is sustainably heading towards 2 percent.
Powell outlined the economic outlook as uncertain, and stated that progress towards the Fed's 2 percent inflation goal isn't guaranteed.
He warned that premature or excessive reduction of policy restraint could reverse the progress made in inflation, and may demand even stricter policy measures to bring inflation back to 2 percent.
Conversely, he also noted that delaying or minimal reduction of policy restraint could unduly weaken economic activity and employment. He affirmed that future interest rate decisions will depend upon careful assessment of incoming data, ever-changing outlook, and risk balance.
In job-related news, payroll processor ADP reported that U.S. private sector employment in February grew less than expected. According to ADP, private sector employment rose by 140,000 jobs in February, following an upward adjustment of 111,000 jobs in January. Economists had predicted an increase of 150,000 jobs, compared to the initially reported 107,000 jobs for the previous month.
On Wednesday, semiconductor stocks performed strongly with the Philadelphia Semiconductor Index surging by 2.4 percent to reach a record closing high. Computer hardware stocks also demonstrated considerable strength, with the NYSE Arca Computer Hardware Index jumping by 1.8 percent, marking another closing record high.
Furthermore, gold stocks benefitted from the increased price of the precious metal, resulting in a 1.8 percent gain by the NYSE Arca Gold Bugs Index. Airlines and network stocks also exhibited a rise in the day's trading while banking stocks declined after performing well on Tuesday.
In international trading on Wednesday, stock market performance in the Asia-Pacific region was mixed. Hong Kong's Hang Seng Index jumped by 1.7 percent, while Japan's Nikkei 225 Index slightly fell and China's Shanghai Composite Index decreased by 0.3 percent.
European markets all saw modest increases on the day. The UK's FTSE 100 Index climbed by 0.4 percent, the French CAC 40 Index rose by 0.3 percent, and the German DAX Index saw a small increase of 0.1 percent.
In the bond market, treasury yields continued their strong upward trajectory from the previous session. Therefore, the yield on the benchmark ten-year note, which inversely correlates with its price, fell by 3.3 basis points to a one-month closing low of 4.104 percent.
Looking forward, Jerome Powell is scheduled for his second day of testimony on Capitol Hill on Thursday. Additionally, reports on weekly jobless claims and the U.S. trade deficit could influence trading.
