Stocks Push Lower as Investors Digest Rate Moves
The S&P 500 dropped as much as 2.9% and the Nasdaq 100 fell as much as 3.7% Thursday afternoon.
Stocks across global financial markets were pummeled after a wave of rate hikes from central banks, with the Federal Reserve and the European Central Bank warning of more pain to come.
U.S. equities hit session lows in the afternoon in New York, with the S&P 500 declining as much as 2.9% and the tech-heavy Nasdaq 100 falling as much as 3.7%.
Both indexes ended Wednesday in the red after Fed Chair Jerome Powell reiterated his hawkish stance and policymakers signaled a peak rate that was above market expectations. Stocks in Europe closed Thursday’s session lower after the ECB’s upward revision to 2024 inflation projections.
The U.S. dollar climbed the most in two months. Britain’s pound fell after the Bank of England slowed its pace of monetary tightening, which investors interpreted as a sign that rates could peak at a lower level than expected. The euro dropped.
A global rally sparked by softer-than-expected U.S. consumer price index data came to an abrupt halt on Wednesday after the Fed sought to dispel hopes for a rate cut next year.
While Fed and ECB slowed the tempo of their hikes to half a percentage point, Powell and ECB President Christine Lagarde hammered home their resolve to remain persistent as they battle inflation.
Investors are also parsing a bevy of U.S. data Thursday showing the economy cooling, even as a labor market stays strong. Softening in the labor market remains a big target for the Fed.
“Markets have been in a tug-of-war between better-than-feared economic data juxtaposed with concerns about the potential for the Fed to over-tighten monetary policy and push the economy into a recession,” said Art Hogan, chief market strategist at B. Riley Wealth.
(Image: Adobe Stock)
Copyright 2022 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.