Stocks on Wednesday were poised to extend a potent advance after Federal Reserve Chairman Jerome Powell implied that the central bank would cut borrowing costs if financial conditions showed signs of weakening from tariff tensions.

How are benchmarks faring?

Futures for the Dow Jones Industrial Average

YMM19, +0.60%

were up 170 points, or 0.7%, those for the S&P 500 index

ESM19, +0.57%

gained 19.1 points, or 0.7%, at 2,824.25, while Nasdaq-100 futures

NQM19, +0.70%

advanced 0.9% to 7,240, a gain of 61 points.

Wednesday’s action comes after the second-best day for the benchmarks in 2019, as the Dow

DJIA, +2.06%

 surged 512.4 points, or 2.1%, to end at 25,332.18, while the S&P 500

SPX, +2.14%

 closed 58.82 points higher, or 2.1%, to 2,803.27. The Nasdaq Composite Index

COMP, +2.65%

 rallied 194.1 points, or 2.7%, to 7,527.12.

What’s driving the market?

Fed Chairman Powell on Tuesday said the central bank was monitoring recent escalation in U.S. trade tensions and signaled a willingness to “act as appropriate” to sustain domestic economic expansion, which has showed signs of waning as Washington wages tariff disputes on multiple fronts.

Powell’s comments imply that the Fed might look to lower benchmark interest rates, which stand at a range between 2.25% to 2.50%, which would reduce borrowing costs for corporations and has sparked fresh enthusiasm for buying equities.

Read: Powell says Fed watching impact of trade tensions on economic outlook

Powell’s remarks came after St. Louis Fed President James Bullard on Monday said rate cuts “may be warranted soon” amid the U.S.’s international trade disputes.

Trade tensions, however, remain the reality, with the Trump administration saying that it will raise import duties against Mexico on Monday. Meanwhile, Chinese officials have indicated that the world’s second-largest economy could restrict exports of rare-earth elements — which are vital in technology production — to retaliate against the U.S’s tariff increases.

Commerce Secretary Wilbur Ross told Bloomberg News on Tuesday (paywall) that the U.S. will take steps to ensure that it isn’t cut off from rare-earth supplies.

However, U.S.. Treasury Secretary Steven Mnuchin is scheduled to meet with People’s Bank of China Gov. Yi Gang over the weekend at a G-20 meeting in Japan, according to Reuters—a development viewed as an upbeat sign amid Sino-American trade tensions.

Also see: Powell signals it might be time to wave goodbye to the Fed’s ‘dot plot’

What data and Fed speakers are ahead?

A report on private-sector employment, the Automatic Data Processing report, will be released at 8:15 a.m. Eastern Time, with a consensus estimate for 175,000 jobs created in May, compared with 275,000 for ADP’s estimate, according to Econoday.

At 10 a.m., the Institute for Supply Management will release it is a reading on the service sector for May, with consensus estimates at 55.8, compared with April’s 55.5

At 2 p.m. the Fed will release its Beige Book, an anecdotal account of business conditions in the central bank’s districts.

Wednesday will see a number of other Fed speakers, including Vice Chairman Richard Clarida, who will deliver remarks at the same monetary policy strategy conference in Chicago that Powell spoke at on Tuesday. His comments will come as Atlanta Fed President Raphael Bostic at 9:45 a.m. Eastern Time speaks at an Atlanta regional housing forum.

Federal Reserve Board member Gov. Michele Bowman will speak at 10 a.m., at her confirmation hearing in front of the Senate Banking Committee for a full 14-year term, while Boston Fed President Eriic Rosengren will moderate a panel entitled “Transmission of Monetary Policy to the Economy: Beyond the Headlines” in Chicago.

Which stocks were in focus?

Shares of Apple Inc.

AAPL, +3.66%

may be in focus on Wednesday after the CEO of the iPhone maker, Tim Cook, declared that his company isn’t a monopoly, speaking with CBS News reporter Norah O’Donnell.

UnitedHealth Group Inc.

UNH, +1.78%

on Wednesday said it would raise its quarterly dividend by 20%to $1.08 a share.

What are strategists saying?

“The flexibility of the Fed if needed to cut rates has set the stage for another positive trading session. On the macro front, the Beige Book Survey and the ADP Employment situation are in focus,” wrote Peter Cardillo, chief market economist at Spartan Capital, in a daily research note.

“We see the Beige Book reveling a mixed economic environment as the trade war bites into the economy,” he wrote.

How are other markets trading?

Stocks in Asia mostly closed higher. Japan’s Nikkei 225

NIK, +1.80%

rose 1.8% and Hong Kong’s Hang Seng Index

HSI, +0.50%

gained 0.5%. However, China’s Shanghai Composite Index

SHCOMP, -0.03%

and

000300, -0.04%

finished flat.

Stocks in Europe were trading higher, with the Stoxx Europe 600

SXXP, +0.52%

 rising 0.5%.

In commodities markets, U.S. oil futures were edging lower

CLN19, -0.69%

while gold prices

GCN19, +0.98%

surged. The U.S. dollar

DXY, -0.01%

meanwhile, retreated slightly.

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2019-06-05