Stocks rose as traders sifted through a raft of remarks from Federal Reserve speakers, with Jerome Powell saying officials “will proceed carefully” on whether to raise interest rates again, while signaling policy will remain tighter for longer.

The S&P 500 notched its best week since July. The yield on 10-year Treasuries fluctuated near 4.2 per cent. The dollar was little changed. The euro failed to gain traction after Christine Lagarde said the European Central Bank will set borrowing costs as high as needed and leave them there for as long as it takes to bring inflation back to its goal.

Powell cautioned that the process of bringing inflation back to its target “still has a long way to go.” In a speech Friday at the U.S. central bank’s annual conference in Jackson Hole, Wyoming, the Fed’s chief also suggested officials could hold rates steady in September, as investors expect.

“Powell, as has been the case for some time, didn’t offer markets anything revelatory today — which was likely the goal,” said Tom Garretson, senior portfolio strategist at RBC Wealth Management. “The market reaction looks consistent with the idea that the Fed is likely done raising rates over the near term, but still stands more than ready to do more if economic data dictates it.”

Fed Bank of Philadelphia President Patrick Harker signaled he favored holding rates at current levels to allow the effects of cumulative tightening to work through the system. His Cleveland counterpart Loretta Mester noted that undertightening interest rates would be “a worse mistake” than raising them too much. Fed Bank of Chicago head Austan Goolsbee said the Fed is part of the way down the road to a soft landing.

More Comments on Jackson Hole:

• Neil Dutta at Renaissance Macro Research:
  • “I thought Powell has delivered a neutral speech. The Fed sees its monetary policy stance as restrictive and will take a more tempered approach to future meetings. Thus, I think it is quite likely that the Fed does not move in either September or November. If, and this is a big if, they deliver on the hike currently in the dots, it will be December.”
• Michael Feroli at JPMorgan:
  • “No alarms and no surprises. After these remarks we still think the Fed is on extended hold, though with a risk they hike next month if the data between now and Sept. 20 come in hot.”
• Ronald Temple at Lazard:
  • “Powell’s speech today should give investors confidence that rate hikes are likely over, absent an unexpected resurgence of inflation. The commentary was largely in line with expectations. While noting that it will take time before the Fed can be certain inflation and expectations thereof are safely anchored at 2 per cent and suggesting that there are situations that could trigger additional rate hikes, Powell was also careful not to signal imminent additional tightening measures.”
• David Russell at TradeStation:
  • “He gave some hope to the dovish side by acknowledging that current policy is restrictive and it may work further over time. But he also threatened to drop the hammer again if the economy and job market run too hot. We’ll be living number to number for a while here.”
• Steve Sosnick at Interactive Brokers:
  • “It’s what I expected - a reminder that since we’re above their inflation target, hikes remain on the table, and don’t expect cuts anytime soon. Not much new.”
• Chris Zaccarelli at Independent Advisor Alliance:
  • “As expected, the Fed chair preserved maximum flexibility by not saying whether the Fed was done raising rates or whether there was at least one more rate hike coming down the pike. We expect that if inflation continues on its current path, then the Fed will hold rates where they are and the economy will stay out of recession (at least for this year), the bull market will resume, and we will end the year higher from here.”
• Gary Pzegeo at CIBC Private Wealth U.S.:
  • “No real surprises from Jerome Powell today. It is a very different environment than a year ago when Powell saw a much larger disconnect between the Fed’s expectations and the bond markets’ pricing. Powell didn’t add much in the way of new information, but he did reiterate that the Fed will ‘keep at it until the job is done’.” 
• Ryan Detrick at Carson Group:
  • “Given the jump in yields lately, he wasn’t as hawkish as some had feared. Remember, last year he took out the bazooka and was way more hawkish than anyone expected, which saw heavy selling into October. This time he hit it more down the middle, with no major changes in future hikes a welcome sign.”
• Quincy Krosby at LPL Financial:
  • “Powell stands by his standard retort: inflation easing, but too soon to declare victory.”

Corporate Highlights

• Boeing Co. is preparing to restart delivery of 737 Max jets to China for the first time in four years, according to people familiar with the matter, a long-awaited breakthrough that would bolster the planemaker’s comeback from one of the worst crises in its history.
• Instacart has joined chip designer Arm Holdings Ltd. in moving ahead with an initial public offering, adding momentum to a return of high-profile listings.
• Rite Aid Corp. is preparing a Chapter 11 bankruptcy filing to restructure debts including opioid liabilities, according to people with knowledge of the matter.
• Marathon Petroleum Corp. is in the process of shutting the third largest oil refinery in the U.S. after a blaze at a storage tank.
• Danaher Corp. has emerged as the leading bidder for biotechnology supplier Abcam Plc, according to people familiar with the matter.
• Affirm Holdings Inc. surged after reporting an increase in transactions on the buy now, pay later firm’s platforms as deals with new merchants helped offset challenges from rising interest rates.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.7 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 0.8 per cent
• The Dow Jones Industrial Average rose 0.7 per cent
• The MSCI World index rose 0.1 per cent

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at US$1.0803
• The British pound was little changed at US$1.2590
• The Japanese yen fell 0.4 per cent to 146.38 per dollar

Cryptocurrencies

• Bitcoin fell 0.2 per cent to US$25,956.64
• Ether fell 0.2 per cent to US$1,645.68

Bonds

• The yield on 10-year Treasuries was little changed at 4.23 per cent
• Germany’s 10-year yield advanced five basis points to 2.56 per cent
• Britain’s 10-year yield advanced two basis points to 4.44 per cent

Commodities

• West Texas Intermediate crude rose 1.2 per cent to US$80.03 a barrel
• Gold futures fell 0.3 per cent to US$1,942.10 an ounce