By Jeanna Smialek and Matt Phillips

New York Times News Service

WASHINGTON — Federal Reserve Chairman Jerome Powell signaled Wednesday that the Fed could soon cut interest rates, sending stocks higher as the benchmark S&P 500 stock index briefly traded above 3,000 for the first time.

Powell, testifying before the House Financial Services Committee, highlighted ongoing risks to the U.S. economy from President Donald Trump’s trade war and a global economic slowdown, suggesting a cut may be likely when the Fed meets again later this month.

That the Fed is considering a rate cut at a moment when the U.S. economy is strong and job market gains are solid underscores Powell and his colleagues’ concern about the future of a record economic expansion. The Fed expects unemployment to remain low and inflation to gradually increase, but Powell said that “uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.”

The Fed, which has not cut rates since slashing them nearly to zero during the financial crisis, has been under pressure from Trump to lower borrowing costs. The president has called the Fed the biggest risk to the U.S. economy and has said repeatedly that Powell does not know what he’s doing.

“Let’s take a look at the economy and let that be the report card,” Powell said when asked about the president’s criticism, pointing to the record-long expansion and low unemployment.

Powell has insisted that the Fed will not bend to political pressure and will do what is needed to sustain the expansion. His testimony pushed markets higher as investors ignored possible economic storm clouds and cheered the increased likelihood that the Fed would soon lower borrowing costs.

Falling interest rates lift stocks for several reasons, even when they come amid mounting economic risks. They lower the returns on new investments in bonds, the main alternative to stocks for many investors. That makes stocks look more attractive to investors.

The S&P 500 is up 19.4% in 2019, after already enjoying one of the longest bull markets on record. Since the climb began in March 2009, the index has more than quadrupled. Stocks closed higher, though the S&P had retreated to 2,993.07.

Powell reiterated that he was not acting at the behest of political pressure, which has included reports that the White House has looked into demoting him from chair to a Fed governor. Asked by a lawmaker what he would do if Trump tried to fire him, Powell responded that he would not step down. “Of course I would not do that,” Powell said. “My answer would be no.”

He added that “the law clearly gives me a four-year term, and I fully intend to serve it.”

Political pressures aside, tepid price gains are making a rate cut more likely. Inflation climbed just 1.5% in the year through May, well below the Fed’s 2% target. Weak prices are a problem because they increase the risk of economy-harming deflation, and leave policymakers less room to cut rates in a downturn.