Stocks rose and fell on Wednesday, but ultimately ended the day lower, after Jerome H. Powell, Chairman of the Federal Reserve, dashed investors’ hopes of a central bank interest rate hike. may end soon.
The S&P 500 index fell to a 2.5% loss on the day, after swinging between gains and losses earlier in the day when Mr. Powell spoke at an afternoon news conference about the Fed’s intentions.
Stocks started the day lower as investors braced for the Fed to raise interest rates by 0.75 percentage points. But even as the central bank lives up to that expectation, attention has been focused on what the Fed has to say about upcoming rate hikes.
The Fed’s initial statement, published alongside the rate decision, seemed to point to a more cautious approach going forward, taking into account the major rate hikes that have already occurred and noting that there is still room for improvement. time before the economic impact of those rate hikes. feel.
The S&P 500 index recovered shortly after the statement was released, climbing to the positive zone. But the quick recovery turned volatile after Mr. Powell began to comment publicly, as he reiterated that the central bank “still has a lot of ways to go” before it ends up raising rates, and noted that as inflation remains high, interest rates may need to move higher than previously expected. He said it was “very early” to talk about a pause in rate hikes.
Investors were quick to react, and the S&P 500 index plummeted. Trading in government bonds was similar, with yields rising late in the afternoon after falling earlier in the day. Two-year Treasury yields, which are sensitive to changes in Fed policy, ended 0.06 percentage points higher at 4.59 percent.
“Rub! If you’re the kid in the back asking if we’re almost there and dad says we have a way to go then you’re bound to embark on a journey,” said Rob Waldner, chief fixed income strategist at Invesco said. “I was impressed by that.”
