S&P, Nasdaq hit record heights after Fed‘s Powell defends gradual rate-hike pace

U.S. stocks rose Friday, with the S&P 500 and the Nasdaq closing at records, after Federal Reserve Chairman Jerome Powell affirmed the central bank’s strategy of gradually normalizing monetary policy, highlighting the strength in the economy and robust corporate results that have helped to support investment appetite for equities.

How did the main benchmarks fare?

The S&P 500 index added 17.71 points, or 0.6%, to 2,874.69, its first since record since Jan. 26. The Nasdaq Composite Index  climbed 67.52 points, or 0.9%, to 7,945.98, carving out its first all-time high since July 25.

The Dow Jones Industrial Average  rose 133.37 points, or 0.5%, to 25,790.35, 3.2% away from its record close on Jan. 26.

For the week, the S&P logged a 0.9% gain—a second straight weekly rise. The Nasdaq advanced by 1.7% for the period, while the Dow booked a 0.5% climb.

What drove the market?

At the Kansas City Federal Reserve’s annual monetary policy symposium in Jackson Hole, Wyo., Powell said he sees two risks surrounding rate hikes, which he outlined as “moving too fast and needlessly shortening the expansion, versus moving too slowly and risking a destabilizing overheating.”

Powell said: “I see the current path of gradually raising interest rates as the [Federal Reserve’s] approach to taking seriously both of these risks.”

The central banker’s keynote at the conference marked his first public appearance since President Donald Trump criticized the central bank’s policy plans, saying he wasn’t “thrilled” with the Fed’s policy path and saying that he thought Powell was a “cheap money” policy maker.

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Market participants said Powell’s comments, economic data, including a report on durable orders, and strong quarterly results, have all helped to support stocks.

Elevated trade tensions between the U.S. and its major trading partners will also remain in view as the latest round of talks between the U.S. and China .

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This past week was perhaps most notable for the legal issues surrounding Trump. On Tuesday, the president’s former lawyer Michael Cohen said he violated campaign-finance law at the president’s direction, while former Trump campaign chairman Paul Manafort was found guilty on eight charges, including tax fraud.

Stocks have mostly shrugged off the political news thus far, but any larger fallout could add to the uncertainty surrounding trade policy and the coming midterm elections. Trump on Thursday said that the market would crash and that “” if he were to be impeached.

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What data were in focus?

U.S. for the third time in four months, driven by a drop in new contracts for passenger jets from Boeing Co.

What were strategists saying?

“It struck me as a little bit dovish,” said Karyn Cavanaugh, senior market strategist at Voya Investment Management, in reference to Powell’s speech. “I think it was refreshing for the market to hear Powell say that inflation wasn’t an issue and that they are OK with it. It is a weight off the market’s mind.”

The key takeaway from Powell’s remarks, according to Bricklin Dwyer, U.S. senior economist at BNP Paribas, is that the Fed will continue to be cautious as it moves ahead with its rate hikes and that it will focus on economic data for future monetary policy decisions.

What stocks were in focus?

Autodesk Inc.  surged by more than 15% after it reported second-quarter .

SunTrust Robinson Humphrey upgraded Netflix Inc.  to buy from hold. The stock jumped 5.8%.

Arconic Inc.  rose 4.7% on reports that the company is holding talks with several parties to sell itself.

Shares of HP Inc.  fell 2% after the tech company late Thursday reported third-quarter , although its adjusted earnings came in above forecasts.

Intuit Inc.  rose 2% after it said that its chief executive officer and its chief technology officer . The company named their replacements and reported adjusted fourth-quarter earnings that beat expectations.

Enbridge Inc.  agreed to buy Spectra Energy Partners . Enbridge shares fell 1.3% and Spectra shares were up 3.6%.

Hibbett Sports Inc.  sank by more than 30% after the retailer reported second-quarter revenue and same-store sales that were below expectations. It also cut its 2019 profit outlook.

Buckle Inc.  shares tumbled 4.5% after the company reported second-quarter .

Gap Inc.  posted second-quarter earnings and sales that beat expectations, but that lagged behind. Gap shares skidded 8.6%.

Shares of Papa John’s International Inc.  closed up 4.6% after reports that the pizza maker had hired bankers to explore its strategic options and stabilize the company after its longstanding CEO was ousted.

S&P Dow Jones Indices late Thursday said that Arista Networks Inc. , replacing GGP Inc. which is being bought by Brookfield Property Partners LP

What were other markets doing?

settled more than 1% higher, while  booked their first weekly advance in seven weeks as the ICE U.S. Dollar Index  extended its .

European , while Asian markets finished the .

—Ryan Vlastelica contributed to this article

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