The SP 500 index started the trading day lower on the comments from Fed Chair Jerome Powell and those of other Fed governors. However, the sentiment has improved as the session progresses, sending the SP 500 index higher by 0.5%.
The Cleveland Fed President Loretta Mester said she would support any decision to raise interest rates in its March 15-16 meeting if inflation and labor market conditions evolve as envisaged. Mester said she was in for three rate hikes, as she spoke in a Bloomberg interview in a strongly hawkish mode.
Fed Chair Powell had earlier said in a Senate Banking Committee testimony on Tuesday that it was time for the Federal Open Market Committee (FOMC) to end monetary policy accommodation. Powell cited improved labor conditions and rising inflation as reasons for such action.
The Fed’s tapering program ends in March, which is when market analysts expect the Fed to implement the first of a potential three rate hikes.