U.S. stocks marched broadly higher in early trading Wednesday, sending the S&P 500 index into record territory, after the head of the Federal Reserve signaled that the central bank is ready to cut interest rates for the first time in a decade.
In his semi-annual monetary report to Congress, Fed Chairman Jerome Powell said that many Fed officials believe a weakening global economy and rising trade tensions have strengthened the case for a rate cut. The market rallied through much of June after the Fed first signaled that it might cut rates if necessary to shield the U.S. economy.
An unexpectedly strong U.S. jobs report Friday briefly dimmed investors' expectations, sending stocks on a two-day skid. But Powell's statement on Wednesday allayed those concerns, sending stocks sharply higher.
Technology companies and communications services stocks drove much of the gains. Western Digital rose 3.3% and Take-Two Interactive climbed 2.5%.
Energy stocks also headed higher as the price of U.S. crude oil climbed 3%. Exxon Mobil gained 1.3%.
Bond prices rose sharply, sending the yield in the 10-year Treasury note down to 2.06% from 2.10% shortly before Powell's remarks were released at 8:30 a.m. Eastern Time.
The higher yields pushed bank shares higher. Rising bond yields drive the interest rates that lenders charge for mortgages and other loans higher. American Express rose 1.8%.
Real estate and utilities stocks lagged the market as investors shifted money out of less risky assets.
KEEPING SCORE: The S&P 500 index rose 0.6% as of 10:07 a.m. Eastern time. The benchmark index briefly moved above 3,000 for the first time.
The Dow Jones Industrial Average gained 164 points, or 0.6%, to 26,947. The Nasdaq added 0.9% and the Russell 2000 index of smaller company stocks climbed 0.6%.
Major stock indexes in Europe also headed broadly higher.
SIGNALING A RATE CUT: Powell's statement kicked off two days of testimony, first before the House Financial Services Committee and then Thursday before the Senate Banking Committee.
The Fed's benchmark rate currently stands in a range of 2.25% to 2.5% after the central bank boosted rates four times last year.
In his prepared statement, Powell said that since Fed officials met last month, "uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook." Meanwhile, inflation has fallen farther from the Fed's target.
Many investors have put the odds of a rate cut this month at 100%.
SOLID QUARTER: Helen of Troy jumped 10.7% after reporting fiscal first-quarter results that topped Wall Street's forecasts.
SLICK RESULTS: Shares in WD-40 climbed 8.9% after the seller of lubricants delivered fiscal third-quarter earnings and revenue that exceeded analysts' expectations.
NOT A GOOD LOOK: Levi Strauss slumped 11.2% after the jeans maker's latest quarterly report card showed its profit margins fell due to higher costs. That overshadowed the company's fiscal second-quarter results, which came in ahead of Wall Street's forecasts.