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US markets end higher on Powell's dovish tone

The US markets ended sharply higher on Wednesday, with the Dow Jones Industrial Average surging more than 600 points, on the heels of Federal Reserve Chairman Jerome Powell's remarks in a speech to the Economic Club of New York that were interpreted as dovish for interest rates. Powell said that interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy- that is, neither speeding up nor slowing down growth. Meanwhile, economic growth in the US was unrevised in the third quarter, according to the second reading released by the Commerce Department. The report said real gross domestic product jumped by 3.5% in the third quarter, unrevised from the initial estimate and in line with street estimates. Upward revisions to non-residential fixed investment and private inventory investment were offset by downward revisions to consumer spending and state and local government spending.

The Commerce Department said consumer spending, which accounts for about 70% of the economy, surged up by 3.6% compared to the previously reported 4.0% spike. However, new home sales in the US showed a substantial decrease from an upwardly revised level in the month of October, according to a report released by the Commerce Department. As per the report, new home sales plummeted by 8.9% to an annual rate of 533,000 in October from an upwardly revised rate of 597,000 in September. Street had expected new home sales to rise to a rate of 575,000 from the 553,000 originally reported for the previous month. With the steep drop, new home sales tumbled to their lowest level since hitting an annual rate of 538,000 in March of 2016.

Dow Jones Industrial Average surged 617.70 or 2.50 percent points to 25366.43, S&P 500 gained 61.62 points or 2.30 percent to 2743.79 and Nasdaq was up by 208.89 points or 2.95 percent to 7291.59.

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