The Dow Jones Industrial Average rallied to a record high on Thursday, led by UnitedHealth shares, after testimony by Federal Reserve Chair Jerome Powell that signaled easier monetary policy could be implemented later this month.
The 30-stock average broke above 27,000 for the first time in its history, before trading just below that level. The Dow was up 0.5%, or 132 points, around 9:50 a.m. ET.
UnitedHealth shares surged more than 4% after the White House dropped a proposal to eliminate drug rebates. CVS Health and Cigna also jumped on the news, gaining 7% and 14%, respectively.
Delta Air Lines rose 0.9% on better-than-expected earnings. Amazon traded 0.7% higher, bringing its market cap back above $1 trillion.
In testimony to the House Financial Services Committee on Wednesday, Powell said business investments across the U.S. have slowed “notably” recently as uncertainties over the economic outlook linger. As a result, expectations of an upcoming rate cut grew.
“Crosscurrents have reemerged,” Powell said. “Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened. Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.”
Powell’s testimony pushed stocks to record highs on Wednesday. Gold also surged while short-term rates slipped.
The minutes from the central bank’s policy meeting last month reiterated Powell’s comments.
“It is fair to say that such a cut would be unprecedented in modern times given overall financial conditions and the balance of economic data,” Michael Shaoul, chairman and CEO of Marketfield Asset Management, wrote in a note. “This is not quite the same as saying it is completely unwarranted, particularly if one grants the yield curve a prognostic capability that overrides other financial markets, and to some extent the trade dispute … represents an exogenous shock to overall economic activity that is very hard to estimate and economic data is in some cases weaker than it was last summer.”
Market expectations for a rate cut in July are at 100%, according to the CME Group’s FedWatch tool. Powell testifies again on Thursday in front of U.S. Senate members.
In economic news, the U.S. consumer price index — a widely followed measure of inflation — rose more than expected last month, with the core CPI posting its biggest gain in 1½ years.