Wall Street ignored Powell's attempt to limit bets on rate cuts, with stocks and bonds rising on expectations that the Federal Reserve will remain on hold this month and ease policy in 2024.

While the Fed chairman stated that officials are prepared to raise rates further if necessary, he also stated that policy is "well into restrictive territory." Two-year yields have dropped 13 basis points to 4.55%. The S&P 500 reached its highest level since March 2022, rising for the fifth week in a row. The value of the dollar fell. Trader bets on a quarter-point Fed rate cut in March have increased, with swaps fully pricing in a cut in May. They anticipate a full point of ease by December 2024.

After more dovish comments from several Fed officials, most notably Governor Waller on Tuesday, the bond market's biggest monthly rally in years picked up steam this week. Known for having a hawkish mindset. Waller expressed increasing confidence that the policy rate is well positioned to bring price growth down to the Fed's target.

In November, a measure of US factory activity fell for the 13th consecutive month as high interest rates continued to hammer the goods-producing side of the economy. Fed Bank of Chicago President Austan Goolsbee expressed confidence that inflation will return to the US central bank's 2% target, praising recent data showing easing price pressures.

Recent data, warnings from top retailers, and anecdotes from local businesses across the country are all pointing to the fact that, after defying expectations all year and splurging over the summer, American households are beginning to pull back.