Investor Jitters as Powell Bolsters Central Bank's Anti-Inflation Stance
Jerome Powell, US Federal Reserve Chairman, intensified Wall Street's rout on Wednesday as his congressional testimony strengthened the central bank's commitment to curb inflation. By hinting at future interest rate hikes, he affirmed the bank's trajectory, leaving all three major U.S. stock indexes teetering on their third consecutive daily losses. Notably, interest rate-sensitive momentum stocks pushed the tech-centric Nasdaq to bear the brunt of the declines.
Tech Giants Weigh on Wall Street’s Indices
Among the weighty drags on Wall Street were tech titans Tesla Inc, along with AI-related stocks Microsoft Corp and Nvidia Corp. These heavyweights significantly contributed to the ongoing downward pressure experienced in the market.
Fed's Inflation Goal Prompts Hawkish Approach
Testifying before the US House Financial Services Committee, Powell underscored the central bank's unwavering commitment to reducing inflation back to the 2% goal. He indicated that if the economy maintains its current trajectory, further rate hikes could be on the horizon, highlighting the Fed's hawkish approach to maintaining this 2% inflation target.
Financial Market Forecasts Further Rate Hike
As per the latest figures, the financial markets are pricing in a 79% probability of another 25 basis point interest rate hike at July's monetary policy meeting's end, based on CME's FedWatch tool.
Market Snapshot: Indices, Sector Movements, and Stock Highlights
By 2:00 PM ET, the Dow Jones Industrial Average had shed 17.9 points, or 0.05%, dipping to 34,035.97, while the S&P 500 lost 13.67 points, or 0.31%, to stand at 4,375.04. The Nasdaq Composite took the hardest hit, dropping 124.88 points, or 0.91%, to 13,542.41. In terms of sectors, energy stocks bounced back from a significant drop, leading the gains among the 11 major sectors of the S&P 500, while communication services and tech faced the most substantial percentage losses.
Key Stock Movers: Tesla, FedEx, UPS, and Crypto Firms
Tesla Inc emerged as the most significant drag on the S&P 500 and the Nasdaq, sliding 4.6%, following a downgrade by Barclays from "overweight" to "equal weight." The rating change comes amid claims that the electric automaker's recent rally is overly sharp about fundamentals. Meanwhile, package delivery firms FedEx and United Parcel Service Inc saw drops of 2.7% and 2.1%, respectively, following disappointing earnings from FedEx and reports of decreasing global demand pressuring profit margins. On the other hand, crypto firms including Coinbase, Riot Platforms, Marathon Digital, and Bit Digital, reaped gains ranging between 1.6% and 5.2%, as Bitcoin surpassed the $30,000 mark.
