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S&P 500 Slumps as Powell Pushes Back Against Fed Pause

AuthorYasin Ebrahim
Published 11/02/2022, 03:03 PM
Updated 11/02/2022, 03:08 PM
© Reuters.

By Yasin Ebrahim

Investing.com -- The S&P 500 tumbled Wednesday after swinging between gains and losses as Federal Reserve chairman Jerome Powell said it was "very premature" to bet on Fed pause after the central bank lifted rates for a fourth time in a row.  

The S&P 500 fell 2%, the Dow Jones Industrial Average fell 1.2% or 389 points, the Nasdaq was down 2.83%.

The Fed raised its benchmark rate by 0.75%, and suggested that future hikes will face a higher threshold, but Fed chairman Jerome Powell pushed back against the idea of a Fed pause.

“[I]t is very premature to be thinking about pausing,” Powell said in a press conference on Wednesday. The chief also hinted that the Fed isn't as close as to end of its tightening cycle as many had expected, saying that the "ultimate level of interest rates will be higher than previously expected [in September]."

The somewhat hawkish remarks from Powell cooled the earlier optimism following the release of the monetary policy, which has “changed significantly,” from the prior statement, Stifel said in a note, adding that it was a “clear signal that wave of 75bp hikes is over.”

Treasury yields turned positive, putting pressure on rate-sensitive sectors including tech.

Apple Inc (NASDAQ:AAPL), Alphabet Inc (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), and Amazon.com (NASDAQ:AMZN) fell more than 2%.

Semiconductor stocks were also pushed lower as Advanced Micro Devices (NASDAQ:AMD) gave up gains following quarterly results and guidance that missed analysts’ expectations.

Airbnb Inc (NASDAQ:ABNB), meanwhile, fell more than 10% as fourth-quarter guidance that fell just short of estimates overshadowed quarterly results that beat on the bottom line. 

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CVS Health (NYSE:CVS), meanwhile, raised its full-year guidance after reporting better-than-expected revenue and profit in the third quarter of the year. It rose more than 2%.

Energy fell more than 3%, meanwhile, even as oil prices climbed following an unexpectedly draw in U.S. weekly crude stockpiles. 

Marathon Oil Corporation (NYSE:MRO), Phillips 66 (NYSE:PSX), and the Devon Energy Corporation (NYSE:DVN), were among the biggest decliners with the latter down more than 12%. 

Latest comments

Lowering inflation is like a sticky plaster, you can pull it of slowly and prolong the pain or tear it off fast and soon enough the pain is over. The soft landing aproach to inflation is prolonging the pain.
i'm here say everthing u wen are you mad *☆■
Clearly the Fed has decided to forgo growth in order to fight rising inflation....that it has itself created. Years of low interest rate environment and incessant QE, where do you expect the money to go?
Inflation was caused 1st by reopening from pandemic, then by Russian aggression and weaponization of energy & food
Hi
You can't fight stubborn inflation by incremental increases in interest rate. Sooner or later the FED will not be able to deny it. THERE IS NO SUCH THING CALLED SOFTLANDING IN MONETARY POLICY.
How else you could fight it, print oil and gas? Soft landing has been openly off the table since August 26 Jackson Hole speech, did you miss the “there will be pain” part?
I think the Democrats will try to save the stock market either on Thursday or Friday.
How do you expect them to do that, exactly?
Wow , genius idea but how :)
I think this is your dream tonight :)
Happy times are over!
dont fight the fed
2+2=5
and sometimes 3
Who is the next Bostic? Someone in the FED is shorting.
Pivot 🪦 😂
can you read or listen?
Pivot summer of 2023 and than pivot again in autumn 2023
Really ?? Who can belive in pivot in such conditions ?
You all wanted a hint now you've got it. More hawkishness.
Fed hikes will continue. Stop whishful Thinking
And that will fix the price of eggs and bread
The market already knows well hikes will continue.
So tired of the geriatric population that runs the show in this country. Not good at all
Uneducated old white males are most likely to be retrumplicans.
I am eager to buy SP500 below 3K, too ;) . I am sure. It will be an opportunitie in the coming year.
Remember, Biden does not support oil and gas, so look at what is happening.  He has never owned a stock and does not support the stock market, hence, look at what is happening.  This affects all of Americans and their retirements.  He has proven that he is not good for the financial welfare and growth of America and we, the people.
the Republicans are worse....
US oil and gas productions at post-Trump highs.
Biden and the Democrats are causing higher inflation and interest rates by their continued excessive spending.  The only way to try and get this under control is with new leadership through our votes.
people that downvote such a true statement are the problem. your hate for Trump blinds you to the evil of the Biden admin..wake up sheep
trump serial liar, con man bigot, racist, self admitted sexual predator accused of banking fraud, tax fraud, instigator of inserection and sedition. he discraced America, cozied up to America's brutal enemies. destroying social security and medicare, and giving massive Republican tax breaks to corporations and the wealthy does not stop inflation it makes it worse, and will impoverish elderly Americans.
Stil printing money
they are actually doing the opposite. but whats the difference we are f^$@#d
He will destroy US economy, all growth and create unemployment. Good for the republicans so they can say that things are going the wrong way in USA
Powell wants stocks to be way cheaper so he can buy back
maybe next time hire someone with a background in finance.
But he is close
No confidence in Powell.  Supply issues have resolved?  Are you actually serious?  He was wrong 1.5 years ago and wrong now.
Powell is not the most incapable fed chair ever
War is Peace, Freedom is Slavery and Ignorance is Strength.Just don't eat
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