Talk hope, Job data and dovish Fed boosts equities on Friday

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Sliding equity prices, weakness overseas and mixed economic data at home have prompted calls for the Fed to put rates on hold, but the USA labor market remains red-hot.

Federal Reserve Chair Jerome "Jay" Powell took steps to reassure financial markets on Friday, saying that the United States central bank would be "patient" about rate rises.

Powell had been sitting next to former Federal Reserve chairmen Janet Yellen and Ben Bernanke when he was asked about his impending meetings with the President regarding Fed policy, which the President has emphasized in the past as the number one problem with the economy. "And particularly with muted inflation readings that we've seen coming in, we will be patient as we watch to see how the economy evolves". Another Dow-member Intel also rose in response to an upgrade from Bank of America Merrill Lynch to buy from neutral.

Wall Street stocks surged higher on Friday (Jan 4) to finish a volatile week on an upbeat note following dovish Federal Reserve comments and a strong United States jobs report. He did not address Fed forecasts from December that sketched out two more rate rises this year, but, combined with the messages of Fed presidents who in recent days downplayed that tightening plan, he delivered the sort of temperate message investors had hoped to hear.

"We're hearing a lot from different groups of people about the role that the balance sheet normalisation may be playing in the markets, " Powell said.

He also defended his independence, saying he would not resign if requested Donald Trump asked.

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The Labor Department reported on Friday that 312,000 jobs were created last month, well above market expectations.

U.S. Treasury yields jumped on Friday, triggering a massive break in the Treasury notes and Treasury bonds futures markets. "There aren't signs of significant economic weakness".

Overall, she said she felt the Fed was in a "really good spot". In the meeting, Powell spoke about what he makes of the USA economy and how he plans to adjust the monetary policy. "Powell is definitely trying to calm the markets".

While not a change in policy, it was a nod to market concerns that the Fed had a key decision on "auto-pilot", as Powell put it last month, even as it pledged to be dependent on economic data.

"However, this idea that has been percolating in the market that round the corner, the USA maybe looking at recession risk, that makes no sense because monetary policy all around the world are still more accommodative and the USA economy is growing faster than it long run trend and the Fed policy is still accommodative, the real Fed funds rate is barely above zero", Glassman said in an interview with CNBC-TV18.

"We are in a new world", Mester said, where the obvious need to raise rates has given way to a situation where economic growth is expected to slow, wages are rising on the basis of low unemployment, interest rate sensitive sectors of the economy like housing have ebbed, and the unemployment rate has roughly "stabilized" at a low level.