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S&P 500 Erases Gains to Close Lower as Powell Relights Fed Hike Jitters

Published 01/26/2022, 04:11 PM
Updated 01/26/2022, 04:20 PM
© Reuters.

By Yasin Ebrahim

Investing.com – The S&P 500 closed lower Wednesday, as tech gave up some gains on surging U.S bond yields after Federal Reserve Chairman Jerome Powell hinted that there was plenty of runway to raise rates, with the first hike widely expected in March. 

The S&P 500 fell 0.2%, after rising about 2% intraday. The Dow Jones Industrial Average fell 0.4%, or 129 points, and the Nasdaq was flat, erasing a 3% gain.

In his press conference that followed the Fed decision, Powell said there was "quite a bit of room to raise rates without hurting jobs," stoking expectations that the Fed's plan to tighten monetary policy measures, which have underpinned risk assets, may be more aggressive than expected. 

The remarks arrived after the Fed said in a statement that it may "soon" be appropriate to raise rates, and confirmed plans to end its bond purchasing program in early March.     

"With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate," the Fed said in a statement. 

U.S. bond yields surged, putting a dent in growth sectors of the market like tech, with the U.S. 10-year Treasury yield.   

Microsoft (NASDAQ:MSFT), which was up more than 5% intraday, gave up some gains after the tech giant delivered an optimistic outlook on revenue following better-than-expected Q2 results.

For the third-quarter, Microsoft guided revenue between $48.5 billion and $49.3 billion, compared with Wall Street estimates for $48.9 billion.

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“Microsoft's cloud guidance was stronger than the Street and when factoring in F/X headwinds we would characterize this as a blowout guide in terms of how investors will digest these numbers” Wedbush said in a note.

The bullish results from the Microsoft helped steady sentiment on growth sectors of the market including consumer discretionary following days of selling.

Tesla (NASDAQ:TSLA), which is set to quarterly results due after the market closes, was well off the highs to close 2% higher. 

Apple (NASDAQ:AAPL), which is set to report quarterly results on Thursday, ended the day roughly unchanged after paring gains. 

Boeing Co (NYSE:BA), down 4%, failed to join in on the broader market melt up after the aircraft maker reported a wider than expected loss in Q4 and revenue fell short of estimates as the delay deliveries of its 787 Dreamliner program hurt performance.

Latest comments

Once there was a great leader who was crystal clear on whatever he did. He kept his country first in whatever he did. There was no business mafia running him or the country during his time as a leader. There was no difference between his thought, words and actions. His tweets /words were so powerful that it could overcome any situation. But the citizens of such a country wanted papu as there leader so they elect one. God save the country.
end the fed.... it's a corrupt fraud as are all central banks
He is preparing the market. He has no option. There is also political pressure. So a definite answer on rate hike will be delayed.
Nothing to prepare here. It makes it worse, Just saying nothing. just put a date, and the market will be better of.
I wish he was not reelected
This year -10% corrections will be normal.
It could be 20%. The public will over react, small businesses close, then larger businesses. The best move to counter act the supply side inflation is to cut government wage payments to those not working and get them back to work producing goods and services.
By fall, we will start hearing about layoffs as the economy starts to slow down from the current level.
The party is not over, expect for new highs now that they grabbed liquidity from July 2021
what the flip are you talking about??
kafkian FED , should have stopped purchase a year ago ... now is worried , by the damage it caused...it will go on the history as the biggest scam ever to have occurred
Eventually reality has ro come home
I wonder what signal Powell gives to gis buddies when he plays with his necktie 👔. 😒
Let's wait for BLACK FRIDAY
It was the Ukraine crisis this time, in my opinion. Putin's demands have just been largely rejected in written if I understand it well. So the tension rises again.
Time to get out of the market and into gold/silver
Not in any universe.
I swear everytime he talks...stock market goes down...😁😁😁
Actually lot of times he has been too dovish versus where he should be at right now at 7% inflation (admitting even in Q&A that inflation was going to be even higher then projected only a month ago + labour market is far too tight)
Bbviously Biden wants inflation and crashed stock market to be his asset for mid terms.
More people , both parents, have to work to pay for bills. that way he can brag aboit unemploynent rate falling...pathetic policy! Long Live Republicans! Long Live Trump!
not a pesidential issue
Well what do you want: rate hikes or inflation? either way stocks go down
Crazy ideas:1. Get rid of all BOD'ers.2. Issue all new stock in all companies.3. All stocks in a company are the dame. No class A, B, prefered...4. One petson, one vote for each share of stock. So to control the comapany, you have to own 50% plus one share. None of this if you have say 12% of stock, you can control the board.5. Get rid of cap gains taxes. You buy a stock, you pay a fed sales tax on it.6. CEO: If you are paided in stocks, you will pay the sales tax in 5.I think if this big if happens, I think itvwould level the playing field for all, have all pay tax, and people will invest more carefully if they know the government will no longer backstop the loss.
Forgot: 1. Get new BOD's.
the government knows to sink the markets before they can go up again
The most flagrant string of fraud in 20 years extends to day 3.  Will the historic level criminal manipulation of the US Ponzi Scheme continue tomorrow?
Dude they pumped and sold it all off... what more you want?
it the government's Ponzi Scheme
Nothing the Fed does will calm CPI. The Fed takes money from the market, causing bond yields to rise and putting pressure on equities as well. CPI inflation comes from fiscal policies that throw money at consumers, while at the same time having a bottleneck on supply. Rational policies would be to open fossil fuel supplies, and getting ships unloaded on the WC. But who thinks politicians are rational?
The fed *******
Nothing the Fed does will calm CPI. The Fed takes money from the market, causing bond yields to rise and putting pressure on equities as well. CPI inflation comes from fiscal policies that throw money at consumers, while at the same time having a bottleneck on supply. Rational policies would be to open fossil fuel supplies, and getting ships unloaded on the WC. But who thinks politicians are rational?
Awsome! Crypto to 0 , stock down 80 percent and housing 60-70 percent in 2 years!!!
Started when the Dems to over
Nothing the Fed does will calm CPI. The Fed takes money from the market, causing bond yields to rise and putting pressure on equities as well. CPI inflation comes from fiscal policies that throw money at consumers, while at the same time having a bottleneck on supply. Rational policies would be to open fossil fuel supplies, and getting ships unloaded on the WC. But who thinks politicians are rational?
All QE went to 24 investment banks, none to consumers, and of printing from intergovermental (6 trillion) Trump admin stole 3 trillion (ppp loans to big corporations after they got rid of employees) and tried to hold another trillion at treasury til after the election … consumersm is a fault ..its the excessive liquidity spilling into commodities on tbe invester side!!!
consumerism is NOT at fault
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