Wall Street surges; U.S. yields fall after Fed's Powell speaks

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The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany August 17, 2021. REUTERS/Staff

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  • S&P 500 and Nasdaq hit record highs
  • U.S. Treasury yields fall after Powell's speech
  • Gold set for third straight weekly rise
  • Oil up as storm approaches Gulf of Mexico

NEW YORK, Aug 27 (Reuters) - Wall Street stocks soared while U.S. Treasury yields fell on Friday after Federal Reserve Chair Jerome Powell indicated the U.S. central bank could begin scaling back its bond buying program by year-end but did not give a firm timeline.

Powell's much-anticipated speech was noncommittal on the precise timing of the Fed's bond tapering, unlike earlier remarks by several regional Fed presidents who wanted tapering to start soon.

At the Fed's annual Jackson Hole, Wyoming, conference, Powell expressed caution about raising interest rates as the Fed tries to nurse the economy to full employment and would avoid chasing "transitory" inflation. read more

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Fed Vice Chair Richard Clarida echoed Powell's remarks on Friday, saying he believed that the central bank could begin tapering later this year.

Following Powell's speech, the S&P 500 and the Nasdaq closed at record highs for the fourth time this week driven by stocks in technology, communications, consumer discretionary and financials.

The yield on the benchmark 10-year U.S. Treasury note fell to 1.3104% after Powell's remarks.

"I think markets pretty much anticipated this. The market has been making a new high every single day and week, and it needs low rates to perform," said David Kalis, partner at Future Fund LLC in Chicago.

The MSCI world equity index (.MIWD00000PUS), which tracks shares in 50 countries, rose 0.72%, while the pan-European STOXX 600 (.STOXX) index gained 0.43%.

Overnight in Asia, the MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.25%, capping its best week since February.

"The Fed is also aware that they can't raise rates aggressively, and inflation does seem transitory as the economy opens up and things get back in gear," Kalis said.

On Wall Street, the Dow Jones Industrial Average (.DJI) rose 0.69% to 35,455.8, the S&P 500 (.SPX) gained 0.88% to 4,509.37 and the Nasdaq Composite (.IXIC) added 1.23% to 15,129.50.

The dollar index , which measures the greenback's performance against a basket of six major currencies, fell 0.397% to 92.684. read more

Gold gained more than 1%.

Spot gold was up 1.44% at $1,817.9490 an ounce. U.S. gold futures rose 1.47% to $1,818.70 an ounce.

Oil prices increased more than 2% and were on track for their biggest weekly gains in over a year as energy companies began shutting production in the U.S. Gulf of Mexico ahead of a major hurricane expected to hit early next week. read more

Brent futures rose 2.3% to settle at $72.70 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 2.0% to settle at $68.74.

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Reporting by Chibuike Oguh in New York; editing by Jonathan Oatis and David Gregorio

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