Dow scade cu 700 de puncte, după cum spune Powell că există o „modalitate” pentru creșterea ratelor

Topline

Stocks fell Wednesday as Federal Reserve Chairman Jerome Powell crushed short-lived optimism about monetary policy loosening any time soon.

Fapte-cheie

The Dow Jones Industrial Average fell 2.6%, or 850 points, after Powell’s 2:30 EST press conference following the Fed’s anunț of a 75 basis-point increase to the federal funds rate.

The S&P 500 and tech-heavy Nasdaq fell 3% and 4% during the period, respectively.

The Dow had risen more than 300 points immediately after the hike as investors clung to a line in the press release indicating that the Fed could soon factor in the impact of rate hikes on the stock market as optimism for less hawkish plans.

“At first glance, it was looking like Christmas might have come early for Wall Street,” OANDA analyst Edward Moya wrote.

Bond markets simultaneously fell, with 10-year U.S. Treasury yields rising as much as 10 basis points to 4.08% as investors piled into safer assets.

Citat crucial

“It is very premature, in my view, to think about or be talking about pausing our rate hikes,” Powell said Wednesday as he held steady in his commitment to bring down sticky inflation. “We have a ways to go.”

Fundalul cheie

This is the sixth rate increase of 2022, raising the federal borrowing rate to a target rate of 3.75% to 4% after two years at 0% to 0.25%. Stocks historically fall following rate hikes as higher borrowing costs often result in less discretionary income for consumers and lower corporate profits. The S&P is down 21% year-to-date, on pace for its worst year since the Great Recession. Prior to this spring, the Fed hadn’t increased rates by 75 basis points deoarece 1994.

Contra

Despite Powell’s tone, many experts still expect the Fed to slow rate hikes following its next meeting in December. CME Group’s closely watched FedWatch instrument projects a 55% chance of a 50 basis-point increase next month. Wednesday “opens the door” for an upcoming 50 basis-point hike, Gargi Chaudhuri, head of investment strategy at BlackRock’s iShares ETFs unit, wrote in a Wednesday note to clients. “The market had priced too high a probability of an overly aggressive Fed,” according to Chaudhuri.

Lecturi suplimentare

Fed Raises Rates Another 75 Basis Points—Further Pushing Borrowing Costs To Highest Level Since Great Recession (Forbes)

Federal Funds Rate History 1990 to 2022 (Forbes)

Dow închide cea mai bună lună din ultimii 46 de ani, în timp ce investitorii se scutură de ghouls Fed (Forbes)