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U.S. stocks pare gains after Fed's Powell says prepared to continue raising rates

Published 08/24/2023, 07:02 PM
Updated 08/25/2023, 10:44 AM
© Reuters

Investing.com -- U.S. stocks pared some earlier gains after Federal Reserve Chair Jerome Powell told those gathered at the central bank's annual conference in Jackson Hole, Wyo., that the Fed was prepared to continue raising rates amid too-high inflation.

At 10:32 ET (14:32 GMT), the Dow Jones Industrial Average was down 4 points or flat, while the S&P 500 was up 0.1% and the NASDAQ Composite was up 0.2%.

Wall Street’s main indices slumped Thursday, despite stunning results from Nvidia (NASDAQ:NVDA), the world's most valuable chipmaker, as better-than-expected unemployment data saw jitters mount ahead of Powell's eagerly-awaited speech.

The blue-chip index fell 370 points, or 1.1%, its worst day since March.

Powell’s speech at Jackson Hole in spotlight

The yearly gathering of central bankers in Jackson Hole, Wyo., started on Thursday. Last year, Powell used this speech to warn of “some pain” ahead in the battle against inflation, hitting the stock market, and any hints about the Fed's rate outlook are sure to reverberate strongly. On Friday, he said inflation was still too high despite progress.

“We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective," Powell said in his speech.

The Fed is trying to walk a tightrope. Inflation readings have been cooling in the past few months, but prices still aren't back to the Fed's annual 2% target and a still-tight labor market gives officials reason to remain vigilant.

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The U.S. central bank is expected to keep interest rates unchanged at its next meeting in September, but there still remains a chance that it raises by another quarter of a percentage point at its November meeting.

Michigan consumer sentiment due

The University of Michigan's latest consumer sentiment reading is the main economic data release Friday. It came in at a cooler than expected 69.5 for August versus expectations for a reading of 71.2.

Earlier Friday, data showed that the mood among German businesses deteriorated more than expected in August, falling for the fourth month in a row and adding to fears that the eurozone’s largest economy may be heading for its second recession inside a year.

Affirm soars after jump in transactions

The quarterly earnings season is coming to a close. Affirm (NASDAQ:AFRM) posted a jump in transactions on its platforms that beat expectations.

Marvell Technology (NASDAQ:MRVL) stock fell 8.2% after the chipmaker posted a fall in second quarter revenue, hit by a weak enterprise market, while Hawaiian Electric (NYSE:HE) slumped 13% after the county of Maui sued the power company, accusing it of acting negligently by failing to shut down its equipment, sparking wildfires.

Crude on course for losing week

Oil prices firmed Friday, but remained on course for a second consecutive week as concerns over slowing Chinese demand and increased U.S. supply as well as a stronger dollar weighed.

The dollar jumped to its strongest level since early June earlier Friday, ahead of a speech by Federal Reserve Chair Jerome Powell at the Jackson Hole symposium. Strength in the dollar weighs on oil markets by making crude more expensive for international buyers.

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(Peter Nurse and Oliver Gray contributed to this item.)

Latest comments

Don't worry. With my recent SPX chart analysis, I have identified a clear dangling nutsack candle formation with a hanging fart fister on the weekly. Bullish as it gets my friends
Powell knows that the inflation numbers, supplied by Biden’s administration, are fudged. The actual number is higher, and this means more hikes.
Which smart Alec told you that inflation numbers are put together by Biden administration? Shows your MAGA IQ.
BIGGEST INVESTMENT JOKE IN THE WORLD.
You must of lost an enormous amount of money
It's entirely possible that the battle against inflation becomes protracted and the terminal rate is somewhere around 8%.
0.25% on top of 5.5%, does it matter?
What? No, that is not what equities have mispriced. Higher rates for longer. Simple. Rate cuts are not comonh unless a big bank collapes. Either way, overpriced.
Economy will do great when the housing market collapses!
I'd  like to see a photo of JP with those ominous double market tops reflected in his glasses while he sez we will and we won't raise rates.
I think I'll invest in other markets more. The USA market appears to be a ponzi scheme. Nothing new has happened after Powell and yet the market is insta dropped.
you're better off if you trade the market. investing is not a good option right now. trading it eg intraday you can buy or sell (short) the market according to the actual conditions and profit from any price move
11AM breaker fires with the predictability of the rising tide, as the flagrantly manipulated JOKE called the US Ponzi Scheme is intent on sending America into another weekend with a financial knife in their back.  Greatest financial FRAUD in history.
The market will depend on Macro data and news for the next move
In the US, which is the first economy in the world, due to the poor of the economy, the material value is very high due to the high inflation. In China, which is the second economy in the world, due to deflation, the goods are available in the world very cheaply and the European countries are in a shortage of food due to the recession. We know only India has good economic growth and a GDP foremost more than 6℅...
10% reduction in government workers would lick this problem.
*100%
🎯
Can we start by laying off Biden first?
Can we hit the magic number 5 in the fed funds rate without causing a deep long lasting problem? Short answer, NO!  40 years of disinflation allowed for big ticket investments to soar in value   We have a generation that never saw the 70's.  In this decade we will not survive as well.
Powell is going to destroy the stock markets all over the world
the media control the market for sure
The pânico mongerers are destroing the stock marketing around the world, Powell is just doing his job, and he seems to do just fine.
We are still very close to historical highs in equities even after several rates hikes and you say that powell is bad for the markets???
This market has been going up since the Great Recession based on unrealistically low rates. This has and will do great damage to US banks. Its ridiculous to assume that these stock valuations can be continued forever. Two of the 3 international evaluation firms have downgraded US debt. The third will do so soon. Be prepared for reality.
I totally agree with you. Stock returns should be reasonable, not upwards of 30% p.a. That just shows the markets are a well organized pump and dump scheme.
Don't worry, the rate hike is trans, even though doctors assigned it up at birth it identifies as down. Anybody who dumps the market is transphobic.
down 2% end of day
All these media somehow want the market to go down, why?so the big sharks can buy at low!
I don't know about you, but I'm waiting with some spare cash.. Just as everyone should.
This is true! I was having breakfast last week with all these media at Denny's in Boise and Adrenechrome Princess ( not her real name, but you know who I mean) said we should make the market go down so the big sharks can buy low. We all laughed and agreed. We did not count on Jimmy Tsang figuring it out though. Drats!
They have been doing this for more than a year non stop, keep making up fear of this and that stories, and each time no matter what Powell says, they just keep saying Hawkish even he emphasized the fed need to wait to see the data before any action, he said either hold on to it, doing too much will hurt the economy, that is not hawkish at all
Powell didnt say that at all!he said doing too much would hurt the economy! stop scare the market!
The House needs to use the Holman Rule and dismantle the fed.
Problems related to the currency are the result of the outrageous Democrat coup against political representation, against the constitution, and against the American taxpayer.  NO AMOUNT OF PRETENDING TO FIX IT WITH MONETARY POLICY IS EVER GOING TO FIX THIS PROBLEM.  Democrats are guilty of economic sabotage, by traying to "correct" the PROBLEM THEY MADE in this manner.  They need to pay for it.
Nutcase.
Why are his comments surprising. THEY WANT TO CRUSH THE ECONOMY..
Inflation is FAR from under control. Has come down a bit, but far from under control.
deflation is blowing. there were supply chain problems. all resolved, backlogs are diminishing. the reality is deflation. we cant grow economy.
Why don't you emigrate to China?
Bloomberg, stop saying the fed signaled rate hike!he didnt say that at all, he is going to hold! he said doing too much is damaging the economy!
Bloomberg? Are you paying attention?
Well that was a speech we already knew about. Signs that the economic pain is working to slow inflation. If it remains too resilient, then more hikes could be on the table, but they also need to avoid tanking the economy too. My guess is that the results will continue to lag and the fight on inflation will be won at current rates. Lending has tightened too which is another plus for fighting inflation. People can't borrow their way to expensive stuff anymore, as easily. Positive all around I think.
“Stunning” resukts from Nvidia were faked … seems like everyone is bying those chips, but havent really bought them? Hmmm. Promises for orders? Looks like a short squeeze to long crush. Suckers!
What are you talking about saying they were faked?
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