Stocks reached record highs Wednesday after testimony from Federal Reserve Chair Jerome Powell bolstered the case for easier monetary policy in the U.S.

The S&P 500 briefly broke above 3,000 for the first time, while the Nasdaq Composite and Dow Jones Industrial Average also reached all-time highs.

In prepared testimony to the House Financial Services Committee, Powell said business investments across the U.S. have slowed “notably” recently as uncertainties over the economic outlook linger.

“Crosscurrents have reemerged,” Powell said. “Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened. Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.”

Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a House Financial Services Committee hearing in Washington, D.C., on Wednesday, July 10, 2019.

Andrew Harrer | Bloomberg | Getty Images

The major stock index pared gains as Powell answered questions from lawmakers, however. While answering questions from lawmakers, Powell reiterated that current trade conditions and muted economic activity have dampened the U.S. economy’s outlook. He noted, however, that the U.S. economy remains on solid ground.

Stocks pared gains later in the session as the S&P 500 traded back below 3,000, up 0.4%. The Dow, meanwhile, climbed about 90 points, or 0.3%, after rallying nearly 200 points. The Nasdaq traded 0.6% higher.

“Powell’s prepared testimony struck a decidedly dovish cord with ‘uncertainties’ over trade and global growth since the June FOMC meeting characterized as having dimmed the outlook. By way of an update, the Chair just confirmed that things have gotten worse,” said Ian Lyngen, head of U.S. rates at BMO Capital Markets.

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His testimony comes after the Fed opened the door to cutting rates at its previous monetary policy meeting in June. The central bank dropped the word “patience” in its statement then.

The Fed also released its minutes from the June policy meeting on Wednesday, which reiterated the case for easier monetary policy has strengthened.

Traders have priced in a 100% probability of a Fed rate cut in July, according to the CME Group’s FedWatch tool. A stronger-than-expected June jobs report tempered expectations for a more aggressive easing.

Powell in his testimony “fully endorsed the July rate cut and did absolutely nothing to pull the markets back from that expectation,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “There was little in the statement to imply what this means past the July meeting, but we can infer that any further softening in the data past July will likely mean more action from the Fed at subsequent meetings.”

— CNBC’s Patti Domm and Sam Meredith contributed to this report.