NEW YORK (Reuters) -The U.S. labor market remained mired in its low-hiring, low-firing doldrums through September, though the economy overall “may be on a somewhat firmer trajectory than expected,” Federal Reserve Chair Jerome Powell said on Tuesday.

He noted that at policymakers will take a “meeting-by-meeting” approach to any further interest rate cuts as they balance job market weakness with the fact that inflation remains well above their 2% target.

Powell also said the end of the central bank’s long-running effort to shrink the size of its holdings, widely known as quantitative tightening, or QT, may be coming into view.

His comments came from the text of a speech prepared for delivery before a gathering held by National Association for Business Economics in Philadelphia.

MARKET REACTION:

STOCKS: U.S. stocks were mixed, with the Dow and S&P 500 up on the day, while the Nasdaq was down.

BONDS: U.S. Treasury yields fell, with the yield on the benchmark 10-year note slipping to 4.02% and the two-year note down at 4.6%.

FOREX: The dollar index slid in wake of Powell’s comments, down 0.3% at 99.03.

COMMENTS:

CALLIE COX, CHIEF MARKET STRATEGIST, RITHOLTZ WEALTH MANAGEMENT, CHARLOTTE, NORTH CAROLINA:

“Jay Powell dropped a major piece of news when he mentioned that the Fed could stop culling the size of its balance sheet in the coming months. The Fed has been reducing its runoff for months now, but the idea of a stable balance sheet could help lower yields in the middle to long part of the curve. That’s a hidden source of relief – especially to homeowners – that rate cuts alone may not be able to deliver.”

“Otherwise, Powell didn’t say anything too surprising. He repeated the ‘no risk-free path’ comment, which I’m guessing will be a buzzy monetary policy phrase for the rest of the year. Both sides of the Fed’s mandate are still under threat, even though Powell and company have chosen to focus on unemployment. Inflation worries still linger, and they may stick around until a weaker job market starts to put pressure on wages and spending.”

“It’s a good time to think about your saving, borrowing and investing strategies. Today’s environment requires a Swiss Army approach of sorts – deploying cash on market drops (but with an eye towards value) and adding fixed income strategically.”

CHRIS GRISANTI, CHIEF MARKET STRATEGIST AT MAI CAPITAL MANAGEMENT, NEW YORK:

“The Powell speech was somewhat more dovish than I expected. He didn’t say anything groundbreaking, but he did emphasize his concern about the slowing job market more than he usually does. Listening to the whole speech, his concerns seemed skewed towards recession rather than inflation. This gave me more confidence in rate cuts coming before the end of the year. Having said that, I am confident that the Fed remains data dependent, and stronger jobs numbers, once we start getting them again, or hot inflation readings could alter this projection. But for now, rates are coming down.”

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