US stocks opened higher on Wednesday as focus remained on Federal Reserve chair Jerome Powell as he prepared to sit for a second day of testimony before lawmakers in Washington, DC.
Stocks sold off a day earlier as Powell indicated that steeper interest rate hikes may be required. Following his statement, the odds of a 50-basis-point rate hike this month more than doubled, according to CME's FedWatch Tool. "[T]he latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated," Powell said."If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes. Restoring price stability will likely require that we maintain a restrictive stance of monetary policy for some time.
Meanwhile, ADP data Wednesday showed businesses added more jobs than expected in February, with private payrolls jumping by 242,000, beating a Dow Jones estimate of 205,000. The reading comes ahead of the key non-farm payrolls report due out on Friday. Separately, the US trade deficit in goods and services inched higher in January, the Commerce Department reported Wednesday. The deficit hit $68.3 billion, $1.1 billion higher than December but below the estimated $68.7 billion.
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