ASX moves higher as tech shares shine

US stocks shook off a midday slump and ended higher overnight, keeping the market on track for its first weekly gain after three weeks of punishing losses.

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Trading was wobbly throughout the day as investors remained focused on another round of testimony before Congress by Federal Reserve chair Jerome Powell. Speaking before a House committee, Powell again stressed that the Fed hopes to rein in the worst inflation in four decades without knocking the economy into a recession, but acknowledged “that path has gotten more and more challenging.”

The S&P 500 ended 1 per cent higher after having been down as much as 0.4 per cent. The Dow Jones Industrial Average rose 0.6 per cent and the Nasdaq gained 1.6 per cent.

Technology and health care stocks drove much of the rally, outweighing losses in energy and financial companies. Bond yields mostly fell.

“The market was poised for a bounce,” said Quincy Krosby, chief equity strategist for LPL Financial. “The catalyst for today’s market has been that oil prices have come down.”

The S&P 500 rose 35.84 points to 3,795.73. The index is up 3.3 per cent so far this week. The Dow gained 194.23 points to 30,677.36. The Nasdaq added 179.11 points to 11,232.19.

The Federal Reserve is attempting to temper inflation’s impact with higher interest rates, but Wall Street is worried that it could go too far in slowing economic growth and actually bring on a recession.

Powell has previously acknowledged that a recession is “certainly a possibility” and that the central bank is facing a more challenging task amid the war in Ukraine essentially pushing oil and other commodity prices even higher and making inflation even more pervasive.

On Thursday, Powell stressed: “I don’t think that a recession is inevitable.” He also acknowledged that the Fed’s tools to combat inflation are blunt and risk causing damage to the economy.

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“Our whole framework is about keeping inflation expectations well and truly anchored,” he said Thursday. Powell emphasised the importance of getting inflation down to the Fed’s goal of 2 per cent. “We can’t fail on this,” he said.

Powell spoke to Congress a week after the Fed raised its benchmark interest rate by three quarters of a percentage point, its biggest hike in nearly three decades. Fed policymakers also forecast a more accelerated pace of rate hikes this year and next than they had predicted three months ago, with its key rate to reach 3.8 per cent by the end of 2023. That would be its highest level in 15 years.

with AP

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