Major US stock indexes finished trading in positive territory

Major US stock indexes rose strongly against the backdrop of heightened hopes for lowering the Fed rates and signs of weakening trade tensions.

Fed Chairman Jerome Powell made it clear that the central bank is open to loosen monetary policy in order to save the economy. According to him, the Fed will "act properly" to support economic growth. Powell noted, however, that the Fed does not know “how or when” the trade conflict will be resolved. “We are closely following the implications of these events for the US economic outlook,” he added.

Comments by the Fed Chairman have heightened expectations for the Fed rate cut. The CME FedWatch tool showed that market participants see a 92 percent chance of a rate cut in September. The odds of a second rate cut in December exceeded 80%.

The market was also supported by official statements from Mexico and China. Mexican President Andres Manuel Lopez Obrador said he expects to negotiate with the United States on immigration before Washington realizes its threat of introducing tariffs.

The Chinese Ministry of Commerce stated that “differences and friction between the two parties” should be resolved through negotiations, which “should be based on mutual respect, equality and mutual benefit.” On Wall Street, these statements were taken as a sign that Beijing had weakened harsh rhetoric.

The focus of market participants was also the latest data on the United States. According to the report of the Ministry of Commerce, production orders fell by 0.8% in April after rising by 1.3% in March (revised from + 1.9%). Economists had expected orders to fall by 0.9%. The fall in production orders was caused by a decrease in orders for durable goods - by 2.1% after rising 1.7% in March. A sharp drop occurred as orders for transportation equipment fell by 5.9%.

Almost all the components of DOW finished trading in positive territory (28 out of 30). The growth leader was NIKE, Inc. (NKE; + 4.34%). Only shares of The Coca-Cola Co. have fallen. (KO; -0.21%) and Verizon Communications Inc. (VZ; -0.63%).

Almost all sectors of the S & P recorded an increase. The greatest growth was shown by the technology sector (+ 2.2%). Only the conglomerate sector decreased (-0.1%).

At the time of closing:

Dow 25,332.18 +512.40 +2.06%

S & P 500 2,803.27 +58.82 +2.14%

Nasdaq 100 7,527.12 +194.10 +2.65%