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 extended their fall, with the yield on the benchmark 10-year note slipping to 4.03% and the two-year note down at 4.1%.

FOREX: The dollar index extended losses, now down 0.3% at 99.03.

COMMENTS:

STEVE SOSNICK, CHIEF STRATEGIST, INTERACTIVE BROKERS, GREENWICH, CONNECTICUT:

"The reason for the sell-off overnight was concerns about the trade war re-accelerating between the US and China. But the markets decided that this isn't really a problem, at least in the short term."

"The market was going up anyway. We were down 10 points before he started speaking so this is just the cherry on top of the cake on today's rally ... but the bulk of the move was unrelated to his comments."

ADAM SARHAN, CHIEF EXECUTIVE, 50 PARK INVESTMENTS, NEW YORK: "The fact is the (stock) market was extended. It pulled back to support technically, which is the 50-day moving average... and bounced off of it."

"The Fed said nothing has changed. Even if (trade) tensions escalate... the Fed is still going to cut rates with the stock market at all-time highs. So, fundamentally, we have a tremendous tailwind coming into effect in the near future."

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK:

"I don't think (Powell) is changing his tune whatsoever. He's saying that the economy is on solid footing, but he's also saying we have weakness. What he's doing is he's preparing the markets for a series of rate cuts, but not necessarily in a sequential order."

"He's saying is he'll cut (interest rates) by 25 basis points at the end of this month then they'll assess the situation. And if the labor market continues to weaken and actually loses jobs, then he might be setting us up for a jumbo cut of 50 basis points in December."

"He's preparing the markets for a rate cut, but he also doesn't want the markets to assume rate cuts are a given. He's using labor market weakness as a hedge."

MICHAEL JAMES, EQUITY SALES TRADER, ROSENBLATT SECURITIES, LOS ANGELES:

"I don't think any of these comments from Chairman Powell are going to have any direct impact on the overall market. It continues to be a market of sentiment and positioning. The Trump tariff tweet from Friday, causing all of the decline, seemed to get shrugged off with some of the comments over the weekend. We had a decent rally yesterday and pulling back this morning on some of the China shipping moves but that also was being relatively dismissed. You can see that in the magnitude of the rally that we've had from this morning."

"The bulls remain fully in charge and until that's shaken with something more significant than these comments from Chair Powell or anything else, that's likely to be the case into the start of third-quarter tech earnings next week." 

"There are bigger factors in place related to positioning and up the start of tech earnings season next week that are going to be far bigger determinants of the market's direction than these comments from Chair Powell will be."

(Reporting by Stephen Culp, Sinead Carew, Caroline Valetkevitch, and Twesha Dikshit)