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Stock market today: Dow ends down as Fed hikes, Powell shoots down rate-cut bets

Published 03/22/2023, 03:46 PM
Updated 03/22/2023, 04:11 PM
© Reuters.
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By Yasin Ebrahim

Investing.com -- The Dow closed lower Wednesday after sharply cutting intraday gains as Federal Reserve chairman Jerome Powell dismissed market bets on a rate cut following the central bank’s widely expected quarter-point rate hike.

The Dow Jones Industrial Average slipped 1.6% or 530 points.The Nasdaq fell 1.6%, and the S&P 500 fell 1.66%.

The Federal Reserve lifted rates by 0.25% and signaled at least one more hike this year, but Fed chair Jerome Powell was quick to dismiss any rate cuts this year.

“FOMC participants don't see rate cuts this year, it is not our baseline expectations," Powell said at the press conference that followed the monetary policy decision and updated projections.

Ahead of Powell’s comments, market participants were forecasting rate cuts later this year. Still, some on Wall Street suggest the tightening in credit conditions - following the wobble in the banking system - will serve the same role as monetary policy tightening and play a bigger role in the Fed's future monetary policy decision. 

Bank of America, citing tighter lending standards, said it now only expects one more 25 basis points rate hike to lift rates to a terminal range of 5.0 to 5.25%, down 25bp from its prior target terminal range.

Banks were back in the firing line, paced by a decline in First Republic Bank as investors were forced to rethink rate cuts that some believed were needed to help restore confidence in the banking system.

First Republic Bank (NYSE:FRC) fell almost 16%, Comerica (NYSE:CMA) fell 8.5% and Lincoln National Corporation (NYSE:LNC) fell almost 8%.

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As Treasury yields moved off session lows, rate-sensitive sectors of the market including tech lost momentum.

Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN), Meta Platforms Inc (NASDAQ:META), Alphabet (NASDAQ:GOOGL), and Microsoft Corporation (NASDAQ:MSFT) ended the day below session highs.

GameStop Corp (NYSE:GME), however, bucked the trend lower, racking up a 35% gain on the day after delivering a surprise fourth-quarter profit. 

Some on Wall Street, however, flagged low margin growth as a concern as cost cuts played a large role in helping the company return to profit. 

"The company exceeded consensus EPS estimates primarily from cost control. Although we applaud management for its successful cost-cutting in the January quarter, it is worth noting that operating income of $46.2 million reflected a margin of just 2.1%," Wedbush said in a note. 

Nike Inc (NYSE:NKE), meanwhile, reported fiscal third-quarter results that beat expectations, but softer than expected sales in its key China market weighed.

"China came in just below Street forecasts, but still grew 1% cFX YOY as the company experienced a rebound in January post the COVID-19 disruptions in December and noted 'strong retail momentum' around Chinese New Year accelerating into February," Credit Suisse said in a note.

Latest comments

JP has the easiest job - just up and down the rate and never get fired. He is sleeping soundly each night. What a life
When sleepy joe goes out for a meal he orders fillet o diaper...
Joe can go out AND order a meal while sleepy?  What a capable person!
I finally feel relieved after knowing raise the rate. Hope fed will continue to keep the rate higher and longer.
Is your head filling with alfalfa/nitrogen?
Biden is worse than Bush, Powell might be a slight upgrade on Greenspan
Seems like you been losing lot of money
losing
nope I've been all cash for a while, I just don't like the pattern of privating gains and socializing losses
Joe Biden and the Democrats created this mess with their irresponsible spending and policies. They are trying to destroy America.
rent-free..
They already did
Off course republicans and Trumps taxreduction laws and fiscal spending have nothing to do with the current debt levels
Fiscal policy decisions could impact the economy.
really? thanks for letting me know..
Our markets are so screwed up after 20 years of abuse by politicians and the Fed. When rates go up the economist's playbook is that banks make more money and get healthier. Most of our banks are trading below Book Value suggesting massive unrecognized losses.
It's historically common for banking sector's P/BV <= 1
um no its not, it's normal for them to trade at a slight premium to BV. JPM is currently trading at 1.3x per MarketSmith. There are many banks currently trading at < 0.5x.
wow I wonder why that is
Down today after a good run all good
Don't worry keep buying. Fed is planning to lower rates next week.
Not a chance
The flagrant and criminal intercept "in late trade" saved the DOW from a 1,000 point loss.  Remarkable how there's no mechanism to limit a criminally manufactured "gain."  Laughingstock of the investing world.
 Tell me, who are the "participants"?
 No, just a 300 point move higher out of thin air.  Can you read a chart?
 When did the Dow move 300 points higher?  And how does a mere 300 point rise "saved the DOW from a 1,000 point loss"?
he just wants you guys to be out of jobs and the people have no money to spend ...lol
Save others but not your own. How ridiculous
Stagflation means chaotic market. One day up, next one down. Too many negatives around make sustained gains difficult. On the other hand, cash loses value quickly too.
according to the rightwing minions, the world and the entire universe is about to collapse, and we have to buy gold.. personally, I have invested in tinfoil as there seems to be a strong and growing market for it..
Better than being a N W O  fart  left wing nut job like your boy the B.G. eh mate?
Better than being a New World fart Order left wing nut job like your boy the B.G. eh mate?
Better than being a NewWorldOrder left wing nut job like your boy the Big Guy eh mate?
common people, it'll be up tomorrow
And down on Friday?
...then back up on turnaround Tuesday.
as the tide goes out let's see how many banks aren't wearing swimming trunks!
All of them. They were ordered to give up the trunks and use US treasury bonds instead.
Face came first in this country, expected.
By tomorrow the sock puppet analysts will manipulate J Powell statements.....once again the investors will continue digest upcoming datas while the IB upgrading companies to push the shares up........
Must be nice to be a So Called analyst when in reality they are Nothing but Pay for Play puppets just like the Big Guy j blunder butt and son.
I think Barani Krishnan got it right this weekend. This market is stuck until the banks are out of the penalty box. The grease that make the wheels turn.
BS. The market was in trouble way before banks got in the same.
Krishnan doesn't have a clue. He's just here for the social media.
Buy metals sell the dollar.
well his strong language indicates that bank crisis is over and the economy is ok. time to buy the dip bank stocks
No worries..I see the 'shrug off' has already begun
Buy Gold & Crypto
Buy Gold and wait.
If you voted for this then don't complain
the Fed is unelected
the Fed board isn't elected
First conveniently leaving out that Barney Frank's bank failed. This has nothing to do with regulation, it has to do with poor risk assessment and oversight. And then layer in bad fiscal policy.
Sorry, it’s at our Warehouse in Andover on Portway Ind Est. I’m not in Andover currently. I’ll be at the warehouse from 7.45 to 5pm tomorrow
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