By Sinéad Carew and Bansari Mayur Kamdar

(Reuters) -Wall Street's three major indexes closed higher on Wednesday as economic data and comments from Federal Reserve Chair Jerome Powell reinforced expectations that the U.S. central bank would reduce its benchmark interest rate this year.

Powell said on Wednesday that he still expected the Fed to cut rates and that the U.S. economy appeared nowhere near a recession although he shied away from committing to a timetable for rate cuts as progress on inflation was not assured.

In prepared remarks ahead of his congressional testimony, Powell said inflation had "eased substantially" since hitting 40-year highs in 2022, but that policymakers still needed "greater confidence" in its decline before rate cuts.

"He was clear that the Fed does see rate cuts coming this year. That's what the markets needed to hear. Was it couched in some ambiguous terms? Yes, but overall the message was clear," said Quincy Krosby, chief global strategist for LPL Financial. "It's not if but when the Fed initiates a rate easing policy."

Along with Powell's testimony, Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, said Wednesday's economic data also boosted hopes for rate cuts as well as confidence in the labor market.

Data showed U.S. private payrolls increased slightly less than expected in February.

And the Job Openings and Labor Turnover Survey (JOLTS) showed job openings fell marginally in January, while hiring declined as labor market conditions continued to gradually ease.

"The number of job openings shriveled a bit, but are still quite healthy and indicative of a labor market that is still looking pretty stout," said Luschini. "It fits the Goldilocks narrative that's become consensus."

February's nonfarm payrolls report due on Friday is expected to offer further clarity on the state of the labor market.

Unofficially, the Dow Jones Industrial Average rose 76.32 points, or 0.2%, to 38,661.51, the S&P 500 gained 26.14 points, or 0.51%, to 5,104.79 and the Nasdaq Composite added 91.96 points, or 0.58%, to 16,031.54.

Wall Street indexes had lost more than 1% on Tuesday with weakness in megacap stocks and as investors anxiously awaited Powell's comments.

Chip companies outperformed the broader market after underperforming on Tuesday, with the Philadelphia semiconductor index rallying.

Tesla extended losses for the third straight session. Baird said the electric vehicle maker's first-quarter earnings were at risk, suggesting delivery estimates still need to go lower.

U.S.-listed shares of China's JD.com advanced after the e-commerce group reported fourth-quarter revenue above estimates and enlarged its share repurchase program.

Shares of cryptocurrency-linked companies including Coinbase Global and MicroStrategy also gained.

CrowdStrike Holdings shares soared after the company forecast annual results above Wall Street estimates, lifted by strong enterprise spending on cybersecurity to counter rising online threats. However, rival Palo Alto fell.

(Reporting by Bansari Mayur Kamdar and Amruta Khandekar in Bengaluru; additional reporting by Ankika Biswas; Editing by Maju Samuel and Richard Chang)