Stocks rally, dollar slumps after Fed statement, Powell remarks

<html xmlns=""><head><title>GLOBAL MARKETS-Stocks rally, dollar slumps after Fed statement, Powell remarks</title></head><body>

ADP employment softer than expected

Fed hikes by 25 basis points

Powell acknowledges disinflation process has started

Updates with close of U.S. markets, oil settlement prices

By Chuck Mikolajczak

NEW YORK, Feb 1 (Reuters) -A gauge of global stocks rallied and the U.S. dollar slumped on Wednesday after the Federal Reserve raised its target interest rate by the expected 25 basis points but comments from Chair Jerome Powell were interpreted as dovish by the market.

The Fed said the U.S. economy was enjoying "modest growth" and "robust" job gains, with policymakers still "highly attentive to inflation risks" as it seeks to tighten financial conditions and reign in high prices. Markets have been pricing in the possibility of a rate cut by the Fed in the back half of the year.

On Wall Street, U.S. stocks were choppy after the Fed announcement but began to rally after Chair Jerome Powell acknowledged inflation was starting to ease and the disinflationary process was at an early stage.

"The market’s reaction implies investors feel we are much closer to the end than we are, let’s say, to the middle of the rate tightening cycle," said Sam Stovall chief investment strategist at CFRA in New York.

"You certainly need disinflation in order to get down to your inflationary target and even though he did say multiple times that we are not yet at a sufficiently restrictive policy stance to bring inflation back down to 2%, the other statements implied that we are getting pretty close."

The Dow Jones Industrial Average .DJI rose 6.92 points, or 0.02%, to 34,092.96, the S&P 500 .SPX gained 42.61 points, or 1.05%, to 4,119.21 and the Nasdaq Composite .IXIC added 231.77 points, or 2%, to 11,816.32.

The gains sent the S&P 500 to its highest close since August 25.

Before the policy announcement, economic data painted a mixed picture, with a labor market that remains strong while manufacturing activity continues to weaken, showing contraction for a third straight month.

Investors have viewed a weaker labor market as a key component to bring down stubbornly high inflation.

Earnings season with earnings from names such as Apple AAPL.O and Amazon .AMZN.O are dueon Thursday.

Early gains for European shares faded to close virtually unchanged ahead of the Fed statement, although industrial stocks SXNP, up 0.85%, were a bright spot. On the heels of the Fed, the European Central Bank (ECB) and Bank of England will make their policy statements on Thursday, in which each is largely expected to hike by 50 basis points.

The pan-European STOXX 600 index .STOXX closed down 0.03% and MSCI's gauge of stocks across the globe .MIWD00000PUS gained 1.08%. MSCI's index hit its highest intraday level since August 17 and was poised for its biggest one-day percentage gain since Jan 20.

Data on Wednesday showed headline inflation in the euro zone moderated to 8.5% in January, from 9% in December, while core prices picked up to 7% from 6.9%, likely keeping pressure on the ECB to raise interest rates aggressively.

The dollar started February on a lower note, continuing its weakening trajectory of the previous four months, losing further ground after Powell's comments, hitting its lowest level since late April. The dollar index =USD fell 0.901%, with the euro EUR= up 1.11% to $1.0983.

The Japanese yen strengthened 0.83% versus the greenback at 129.02 per dollar, while Sterling GBP= was last trading at $1.2371, up 0.41% on the day.

U.S. Treasury yields initially moved up after the statement but reversed course and mostly fell after Powell's comments were still lower on the day, as benchmark 10-year notes US10YT=RR were down 10.5 basis points to 3.424%, from 3.529% late on Tuesday, although the two-year yield briefly turned higher after the most recent batch of economic data.

Despite the drop in the dollar, U.S. crude CLc1 settled down 3.12% to $$76.41 per barrel and Brent LCOc1 settled at $82.84, 3.07% lower on the day after U.S. government data showed big builds in inventories while OPEC and its allies kept to their output policy.

World FX rates YTD

Rates and inflation Rates and inflation

Reporting by Chuck Mikolajczak; editing by Jonathan Oatis and Diane Craft

To read Reuters Markets and Finance news, click on For the state of play of Asian stock markets please click on: 0#.INDEXA

Penafian: Entiti XM Group menyediakan perkhidmatan pelaksanaan sahaja dan akses ke Kemudahan Dagangan Atas Talian, yang membolehkan sesorang melihat dan/atau menggunakan kandungan yang ada di dalam atau melalui laman web, tidak bertujuan untuk mengubah atau memperluas, juga tidak mengubah atau mengembangkannya. Akses dan penggunaan tersebut tertakluk kepada: (i) Terma dan Syarat; (ii) Amaran Risiko; dan Penafian Penuh. Oleh itu, kandungan sedemikian disediakan tidak lebih dari sekadar maklumat umum. Terutamanya, perlu diketahui bahawa kandungan Kemudahan Dagangan Atas Talian bukan permintaan, atau tawaran untuk melakukan transaksi dalam pasaran kewangan. Berdagang dalam mana-mana pasaran kewangan melibatkan tahap risiko yang besar terhadap modal anda.

Semua bahan yang diterbitkan di Kemudahan Dagangan Atas Talian kami bertujuan hanya untuk tujuan pendidikan/maklumat dan tidak mengandungi – dan tidak boleh dianggap mengandungi nasihat kewangan, cukai pelaburan atau dagangan dan cadangan, atau rekod harga dagangan kami, atau tawaran, atau permintaan untuk suatu transaksi dalam sebarang instrumen kewangan atau promosi kewangan yang tidak diminta kepada anda.

Sebarang kandungan pihak ketiga serta kandungan yang disediakan oleh XM, seperti pendapat, berita, penyelidikan, analisis, harga, maklumat lain atau pautan ke laman web pihak ketiga yang terdapat dalam laman web ini disediakan berdasarkan "seadanya" sebagai ulasan pasaran umum dan bukanlah nasihat pelaburan. Sesuai dengan apa-apa kandungan yang ditafsir sebagai penyelidikan pelaburan, anda mestilah ambil perhatian dan menerima bahawa kandungan tersebut tidak bertujuan dan tidak sediakan berdasarkan keperluan undang-undang yang direka untuk mempromosikan penyelidikan pelaburan bebas dan oleh itu, ia dianggap sebagai komunikasi pemasaran di bawah peraturan dan undang-undang yang berkaitan. SIla pastikan bahawa anda telah membaca dan memahami Notifikasi mengenai Penyelidikan Pelaburan Bukan Bebas dan Amaran Risiko mengenai maklumat di atas yang boleh diakses di sini.

Kami menggunakan kuki untuk memberikan anda pelayaran terbaik di laman web kami. Baca lagi atau tukar tetapan kuki.

Amaran Risiko: Modal anda dalam risiko. Produk yang menggunakan leverage mungkin tidak sesuai untuk semua individu. Sila lihat Pendedahan Risiko kami.