The stock market opened higher on Monday, with the Dow rising over 250 points after President Joe Biden chose Jerome Powell over Lael Brainard to lead the Federal Reserve, ending speculation about who would lead the central bank as the economy faces high inflation.
The Dow Jones Industrial Average rose 0.8%, over 250 points, while the S&P 500 gained 0.9% and the tech-heavy Nasdaq Composite increased 0.9%—both hitting new record highs.
After weeks of uncertainty, Biden on Monday chose to reappoint current Fed chair Jerome Powell, a Republican who led the central bank’s historic response to the pandemic.
Biden said in a statement Monday morning that he would nominate Powell for another four-year term as Fed chairman starting in February, pending final approval from the Senate.
Powell’s main competition for the position, Lael Brainard—a Democrat who was favored by progressives in Washington for her bold stance on climate change, was nominated as vice chair of the Federal Reserve.
Bank stocks and Treasury yields widely rallied after the White House announced the Fed decision on Monday, with stocks like JPMorgan and Morgan Stanley rising about 2%.
Shares of electric vehicle maker Tesla rallied more than 3% after CEO Elon Musk said the Model S Plaid could launch in China by the spring of 2022, while shares of vaccine maker Moderna continued to rally—rising nearly 2% after the FDA’s decision last week to approve use of the company’s booster shot for all adults.
“Although this decision likely wasn’t an easy one for the President, this should be greeted positively from markets,” says Ryan Detrick, chief market strategist for LPL Financial. “We know what we will get from Mr. Powell, and this is one less worry now.”
What To Watch For:
Powell was viewed as a safe pick by markets—not only is he favored by Republicans and moderate Democrats, but his accommodative monetary policy response to the pandemic has largely been credited for staving off an economic depression. The market viewed Brainard as a slightly more dovish pick, meaning that the central bank would likely have taken longer to raise interest rates than under Fed chair Jerome Powell. Brainard also quickly became a favorite of progressive Democrats for her belief that the Fed should do more to combat climate change—unlike Powell, who has said in the past that it’s not a top priority.
A former private equity executive, Powell was first appointed to the Fed board a decade ago by President Barack Obama and then later succeeded Janet Yellen in 2018 to become Fed chair during the Trump Administration. Brainard, meanwhile, is a Harvard-trained economist who led the Treasury Department’s international affairs from 2010 to 2013 and served as the deputy national economic advisor to former President Bill Clinton. If Brainard’s appointment is also confirmed by the Senate, she will become just the third woman to ever serve as Fed vice chair.
Business News Governmental News Finance News
Need Your Help Today. Your $1 can change life.