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U.S. Stocks Drop After Fed Signals More Rate Hikes Ahead

Published 11/03/2022, 09:49 AM
Updated 11/03/2022, 10:25 AM
© Reuters.

By Liz Moyer

Investing.com -- U.S. stocks fell early Thursday as investors digested the Federal Reserve’s message that interest rates will continue to climb as it battles inflation.

At 10:21 ET (14:21 GMT), the Dow Jones Industrial Average was down 196 points, or 0.6%, while the S&P 500 was down 1% and the NASDAQ Composite was down 1.4%.

Treasury yields were rising after the Fed’s latest decision on rates, which rose another 0.75 percentage point. But more notably, Chair Jerome Powell said it wasn’t time to back off rate increases, though he conceded they may get smaller as the central bank soaks in economic data and studies how well its actions to now have done their job.

The 2-year Treasury yield jumped to its highest since mid-2007, to 4.739%.

Ultimately, the Fed’s benchmark rate is seen rising above the 4.6% target forecast by the Fed at its September meeting, to 5% or more. 

The labor market remains tight. New jobless claims unexpectedly fell last week to 217,000 from 220,000 expected. Tomorrow, investors will see the October report on jobs from the government, which is expected to say the economy created 200,000 jobs last month.

Data on the services sector was slightly weaker than expected. The Institute for Supply Management reported that non-manufacturing PMI dipped to 54.4 in October, lower than the 55.5 expected and from 56.7 the prior month.

Moderna Inc (NASDAQ:MRNA) shares fell 0.1% after the pharma cut its annual sales forecast for its Covid-19 vaccine.

Roku Inc (NASDAQ:ROKU) shares fell 14% after lowering expectations for the current quarter.

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Oil fell. Crude Oil WTI Futures was down 2.3% to $87.91 a barrel, and Brent Oil Futures crude fell 1.7% to $94.52 a barrel. Gold Futures fell 1.4% to $1627.

Latest comments

Stop fighting the fed people. Be smart with your money. Inflation is a beast we all will suffer from if the don’t succeed in *****it. They have no other choice than brake something. You don’t want to be buying when it brakes.
And for the love of g, stop assuming what the fed is going to do. They are telling you straight in your face. Open your ears for once. Assumption is the mother of all..
Well said in both.
why would somebody put deliberately an economy into recession? the fed should encourage growth. the market will deal with it and an oversupply will lead to competition and price reduction. raising rates will suffocate SMEs and give all control to multinationals.
Recession is not the goal.
then called slowing the economy. nobody does that. this is not the 70s and with debt levels so high it will need very little to get the whole financial market into a down spiral.
Everyone knew JP will increase 75bps intrest rate as he intimated in October .
I didn't hear how JP conceded to smaller rate hikes. Wishful thinking.
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.
Monetary policy never works. Its a pseudo science.
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