S&P 500 ends 3-day losing streak. Dow jumps 700 points after Powell signals smaller rate hikes

Pro Picks: Watch all of Wednesday's big stock calls on CNBC
Pro Picks: Watch all of Wednesday's big stock calls on CNBC

Stocks saw broad gains Wednesday after Federal Reserve Chair Jerome Powell confirmed that the central bank will slow the pace of its aggressive rate-hiking campaign that has weighed on markets.

The Dow Jones Industrial Average closed up 737.24 points, or 2.18%, to 34,589.77. Meanwhile, the tech-heavy Nasdaq Composite jumped 4.41% to 11,468.00. The S&P 500 added 3.09% to 4,080.11.

"It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down," Powell said in a speech at the Brookings Institution in Washington, D.C. "The time for moderating the pace of rate increases may come as soon as the December meeting."

Powell cautioned the Fed may stay with restrictive policy for a long time before it ends its inflation fight.

"Despite some promising developments, we have a long way to go in restoring price stability," Powell said.

Powell's comments bolstered growing optimism among some investors that the Fed will deliver a smaller, half percentage point rate hike at its next meeting on Dec. 14 after four straight increases of three quarters of a point to tame high inflation.

"Investors are looking for that rock of certainty – something to hang your hat on for greater predictability of where the Fed's going with interest rates," said Greg Bassuk, CEO of AXS Investments. "The messaging that the pace of rate increases can begin slowing as early as December was that rock."

The 10-year Treasury yield eased a bit on the news.

Wednesday's rally provided an 11th-hour boost to a winning November. The Dow and S&P 500 ended the month up roughly 5.7% and about 5.4%, respectively, while the Nasdaq Composite gained nearly 4.4%.

Lea la cobertura del mercado de hoy en español aquí.

Indexes close higher following afternoon rally

All three indexes ended higher Wednesday, coming off a rally on the back of Fed Chair Jerome Powell's comments.

The Dow closed up 737.24 points, or 2.18%, to 34,589.77. Meanwhile, the Nasdaq Composite jumped 4.41% to 11,468.00. The S&P 500 added 3.09% to 4,080.11.

That marked a reversal from earlier in the day, when the Dow and S&P 500 were lower following a mixed bag of new economic data in the morning.

— Alex Harring

Office REITs at risk of dividend cuts, BMO Capital Markets says

Expect dividend cuts to mount at companies in the office real estate investment trust space in the near future, according to BMO Capital Markets.

"Office REITs are facing a triple whammy of rising interest rates, weakening tenant demand, and deteriorating leasing economics," wrote analyst John Kim in a note to clients Tuesday. "With rising uncertainty and 7 REITs in the sector trading with a dividend yield above 8%, management teams may decide to cut their dividends now, to fund debt repayment and capex."

He highlighted Easterly Government Properties, SL Green Realty and Vornado Realty Trust as some of the companies most susceptible to dividend cuts.

"In the coming quarters, Office REITs will continue to be faced with an expanding pool of sublease space as companies look to cut costs and trim on space while embracing the remote and hybrid work models," he said.

— Samantha Subin

Bank of America downgrades Carvana

Bank of America downgraded Carvana to neutral, saying the stock could go to zero without a fresh injection of capital.

"We now believe that without a cash infusion, Carvana is likely to run out of cash by the end of 2023. There is no indication yet of a potential cash infusion, for example from the Garcia family (the CEO and his father the chairman), and it is impossible to predict if and when that would occur," according to a Wednesday note from the firm.

"This combined with the high short interest creates a situation where this stock's performance looks binary: either it goes to zero or it is worth many times its current price of $7.34," the note added.

CNBC Pro subscribers can read the full story here.

— Sarah Min

Dow breaks 600 points midway through final trading hour

The Dow hit more than 600 points up in the final half hour of trading.

The benchmark comes as the 30-stock index has marched up following Fed Chair Jerome Powell's comments indicating the central bank will slow its interest rate hike campaign.

Loading chart...

— Alex Harring

A soft landing is possible, but that a 'tremendous' bull market probably isn't coming in 2023, Yardeni says

Ed Yardeni of Yardeni Research thinks that the economy will likely hold up amid the Federal Reserve's rate hikes to tame high inflation, leading to a soft landing next year.

Still, that won't lead the S&P 500 to a new high for the next two years.

"I don't think we're looking at any tremendous bull market coming up here given that valuation multiples are still quite high," he said, during CNBC's "Halftime Report" on Wednesday, adding that he sees earnings going sideways for the next few years.

He thinks that the S&P 500 may get to about 4,800 in 2023, which would mark a new all time high and is more than 21% higher than where the index is currently trading. Still, he said he doesn't see stocks going much higher than that next year.

He added that he thinks it will be a stock picker's market going forward

—Carmen Reinicke

Dow briefly hits 400 points as traders ready for final hour of trading

The Dow briefly traded more than 400 points higher on the back of Fed Chair Jerome Powell's comments Wednesday afternoon.

That equates to a gain of about 1.2% for the 30-stock index.

Meanwhile, the S&P 500 was up about 1.9%, while the tech-heavy Nasdaq Composite added 2.9%

— Alex Harring

Blackstone is a top pick in financials, Morgan Stanley says

Morgan Stanley named Blackstone a top pick in financials as investors prepare for a potential pivot from the Federal Reserve.

"While we remain cautious generally on asset mgrs over the next 3-12 months given the volatile and less certain macro environment, we are poised to be nimble on early cycle opportunities and thus selectively adding risk to our Financials' Finest list with the addition of BX as we prepare for the pivot and peak rates," analyst Betsy Graseck wrote.

The analyst said the stock is at an attractive entry point after its decline this year. Shares of Blackstone are down roughly 33% in 2022.

CNBC Pro subscribers can read the full story here.

— Sarah Min

S&P 500 erases all of Monday-Tuesday decline — and then some — on back of newfound bullishness

The S&P 500 clawed back all of the Monday-Tuesday decline on Wednesday on the back of Federal Reserve chairman Jerome Powell's remarks in Washington signaling a a more moderate pace of future increases in the central bank's benchmark overnight lending rates.

The S&P 500 got as high as 4037 intraday Wednesday, surpassing last Friday's holiday-shortened Black Friday close of 4026. The low on Tuesday — touched again early Wednesday — was in the area of about 3938.

All 11 sectors rallied in the S&P 500, with communication services, tech and consumer discretionary outperforming and the other eight underperforming. The laggards were chiefly energy, financials, industrials and consumer staples stocks.

— Scott Schnipper

Powell continues to believe in a path to a soft-ish landing

I do continue to believe there's a path to a soft landing, says Jerome Powell
I do continue to believe there's a path to a soft landing, says Jerome Powell

Federal Reserve Chair Jerome Powell says he continues to believe in a path to a "soft-ish" landing — even if the path has narrowed over the past year.

"I would like to continue to believe that there's a path to a soft or soft-ish landing" Powell said at the Brookings Institution.

"Our job is to try to achieve that, and I think it's still achievable," Powell said. "If you look at the history, it's not a likely outcome, but I would just say this is a different set of circumstances."

— Sarah Min

Slowing down on rate hikes is a good way to balance risks, Powell says

Fed Chair Jerome Powell said during his remarks Wednesday that chilling interest rate hikes will help balance management risks.

"We have a risk management balance to strike," he said. "We think that slowing down at this point is a good way to balance the risks."

— Alex Harring

S&P 500 rises more than 1%, Nasdaq cracks 2% following Powell's remarks

The S&P 500 continued its ascent Wednesday on the heels of Fed Chair Jerome Powell's remarks, reaching more than 1% up despite trading down earlier in the day.

The broad index was up 1.3% around 2 p.m.

Loading chart...

Meanwhile, the tech-heavy Nasdaq Composite was up more than 240 points, or 2.2%, around the same time.

— Alex Harring

Indexes jump on Powell comments

Fed Chair Jerome Powell's comments indicating the central bank will slow future interest rate hikes as soon as December put upward pressure on the three major indexes.

The S&P 500 jumped up 0.6% from the red on the news.

The Dow was near flat after trading down for most of the day.

The Nasdaq Composite