Stocks rose higher on Tuesday, reversing earlier lows, after Federal Reserve Chair Jerome Powell said that inflation has shown some signs of easing. The Dow Jones Industrial Average climbed over 265 points, while the S&P 500 Index and Nasdaq Composite rose 1.3% and 1.9%, respectively.
Here's how the market settled on Tuesday:
S&P 500 Index (SPY ): +1.29% or +52.92 points to 4,164.00
Dow Jones Industrial Average (DIA ): +0.78% or +265.67 points to 34,156.69
Nasdaq Composite Index (QQQ ): +1.90% or +226.34 points to 12,113.79
Stocks rallied higher on Tuesday shortly after Powell's remarks at the Economic Club of Washington D.C., with the Dow gaining more than 275 points at one point and the S&P 500 and Nasdaq Composite each jumping over 1%.
"The disinflationary process, and the process of getting inflation down, has begun and it's begun in the goods sector, which is about a quarter of our economy," Powell said Tuesday afternoon. "But it had a long way to go. There are the very early stages."
Commenting on the central bank's pace of interest rates moving forward, Powell said that if the data shows that inflation is running hotter-than-expected, the Fed will continue to raise rates.
"The reality is we're going to react to the data," Powell said. "So if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do move and raise rates more than is priced in."
Powell's Tuesday comments follow the Fed's policy decision last week, where Powell said in post-decision remarks that he believes the central bank is making progress in bringing down inflation. Wall Street has rallied higher throughout the start of the year on bets that cooling inflation will prompt the central bank to pause or even cut interest rates in the near- to medium-term.
Elsewhere for stocks, Pinterest (PINS ) shares fell on Tuesday after the social media company issued weaker-than-expected guidance for the current quarter following a fourth-quarter revenue miss. Pinterest said it expects revenues to grow in the low single digits for the first quarter year-over-year, slightly below the 6.9% growth expected by Wall Street.
Shares of Royal Caribbean (RCL ) rose on Tuesday after the cruise operator posted stronger-than-expected guidance following its mixed fourth-quarter earnings results. The company expects 2023 earnings per share of $3.00 to $3.60, excluding items as it has been able to raise prices without "seeing a pullback from the consumer," according to comments made by CEO Jason T. Liberty in a Tuesday earnings call.
Chegg (CHGG ) shares sunk as low as 23% on Tuesday after education technology company issued disappointing guidance for first-quarter and full-year revenue, citing economic uncertainties and concerns over subscriber growth.
Bed Bath & Beyond (BBBY ) shares dropped nearly 50% on Tuesday after the retailer announced a public offering on Monday to raise about $1 billion.
Shares of Baidu (BIDU ) climbed more than 13% of the Chinese search engine giant said it plans to launch its own ChatGPT competitor called "Ernie Bot" in English early this year.
BP (BP ) shares rose Tuesday after the British oil giant posted record annual profits as fossil fuel prices surged following Russia's invasion of Ukraine last year. The company posted revenues of $27.7 billion for 2022, compared with #12.8 billion for the previous year.
Zoom Video (ZM ) shares rose on Tuesday after the company announced plans to cut about 1,300 employees, or 15% of its workforce. CEO Eric Yuan wrote in a blog post that the company needs to adapt to the "uncertainty of the global economy" as the world continues to recover post-pandemic.
Looking ahead, investors will react to earnings from Wall Street heavyweights like Disney (DIS ) and Uber Technologies (UBER ) on Wednesday.