Fed Chief Jerome Powell Says He Won't Resign If Trump Asks

The rally more than made up for blistering losses on Thursday, when the Dow shed 2.8 per cent after Apple slashed its revenue forecast on weak demand in China and a U.S. report showed manufacturing activity slumping to a two-year low.

Stocks rallied further after Fed Chair Jerome Powell told a gathering of economists that the USA central bank had no "pre-set" plan for interest rates and was carefully monitoring economic conditions.

On Friday, the Labor Department reported the U.S. added 312,000 jobs in December, much above analyst expectations. He also pledged to stay in his job even if asked to quit by President Donald Trump, who has been critical of him.

On December 19, the Federal Reserve increased the interest rate for the fourth time in 2018 - from 2.25 percent to 2.5 percent.

But Mr Powell once again stressed that the Fed had no "pre-set" plan for interest rates and would bide its time to see how the economy evolves.

Jerome Powell, chairman of the Fed said: "Markets are expressing concerns about global growth in particular, that's becoming the main focus and trade negotiations which are related to that. Can we wait?", Cleveland Federal Reserve Bank President Loretta Mester said in an interview with Reuters.

Apple shares drop after news of waning iPhone sales
Apple's decision to cut its sales outlook, "isn't a huge shock at this point", said Shannon Cross of Cross Research. China's economy has been pinched by the ongoing Sino-US trade war which is spilling over to other Asian economies.

Appearing on a panel with his two predecessors - Yellen and Ben Bernanke - Powell also said that the Fed could alter its approach to trimming its huge balance sheet if it determines such a change is needed.

The dollar weakened, Treasury yields advanced and US stocks surged to close 3.4 per cent higher on the S&P 500 Index as investors interpreted the Fed chairman as sounding as if he sees scope to wait and see how the economy performs before raising rates again.

Futures traders on Friday were pricing in a small chance of a rate hike this year, versus no chance seen before Powell began speaking.

Dallas Fed President Robert Kaplan said on Thursday that planned rate hikes should be halted for now, while on Friday Mester said she sees only one or two rate hikes this year.

That's a relief, given how concerns about monetary policy dominated many recent selloffs, but it wasn't the only problem.

"I'll just say that we are listening carefully to that.listening sensitively to the message that markets are sending and we are going to be taking those downside risks into account as we make policy going forward", he said.

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