Wall Street ends well as Powell’s speech confirms hawkish rate stance

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, USA on August 15, 2022. REUTERS/Brendan McDermid/File Photo

Aug 26 (Reuters) – Wall Street fell on Friday, and investors keen on a moderate interest rate path were disappointed after the central bank signaled it would raise rates to curb inflation.

High-growth tech stocks fell after rallying earlier in the day in anticipation of Powell’s scheduled speech at the Jackson Hole Federal Reserve conference in Wyoming.

Powell said at the event that the U.S. economy will need tighter monetary policy for “some time” before inflation gets under control. That means slower growth, a weaker job market and “some pain” for households and businesses, he added. read more

Investors knew more rate hikes were coming, and they were split on whether the Fed would come next month for a 75-basis-point hike or a 50-basis-point hike.

However, recent data highlighting continued strength in the labor market to offset two consecutive quarters of negative economic growth has led to some speculation that a more moderate pace of hikes may be coming.

“It’s not about the pace of hikes going forward and how they tighten financial conditions, it’s about the length of time left in that restrictive policy stance,” said Garrett Melson, portfolio strategist at Natixis Investment Managers.

“That’s the nuance they’re trying to push forward and Powell could have been a little more forthright today. But if you’ve listened to other Fed speakers over the last two weeks, it’s the same message.”

All 11 major S&P 500 sectors were lower with information technology (.SPLRCT)Communication Services (.SPLRCL) and consumer preference (.SPLRCD) Codes on steep inclines.

According to preliminary data, the S&P 500 (.SPX) It lost 140.83 points, or 3.35%, to end at 4,058.29 points, while the Nasdaq Composite (.IXIC) It lost 496.39 points or 3.93% to 12,142.88. Dow Jones Industrial Average (.DJI) It fell 1,003.74 points or 3.01% to 32,288.04.

U.S. two-year Treasury yields briefly hit their highest levels since October 2007 before settling near two-month highs since October 2007, weighing on megacap growth and tech stocks.

High-growth and tech stocks fell.

The previous session’s leader was Nvidia Corp (NVDA.O) And Amazon.com Inc fell. Meanwhile, Google-parent Alphabet Inc (GOOGL.O)Meta Platforms Inc (META.O)and Block Inc (SQ.N) And sunk in.

US stock indexes have retreated since the start of the year as investors priced in expectations of aggressive interest rate hikes and a sluggish economy.

But they have bounced back strongly since June, with the S&P 500 recouping about half of its losses for the year on hopes of stronger-than-expected quarterly earnings and decades-high inflation peaking.

The data showed earlier that consumer spending barely rose in July, but inflation eased significantly, giving the central bank room to cut its aggressive interest rates. read more

Dell Technologies Inc joined rivals in predicting a slowdown in inflation and a bleak economic outlook, prompting consumers and businesses to tighten their wallets. read more

Affirm Holdings Inc (AFRM.O) The drop came after the buy-now-pay-later lender forecast full-year revenue below Wall Street estimates, underscoring a broader decline in the fortunes of the once high-flying fintech sector.

Reporting by Bansari Mayur Kamdar, Devi Jain, Anisha Sircar and Shruti Shankar in Bangalore and David French in New York; Editing by Maju Samuel, Aditya Soni and Grant McCool

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