US stocks fell on Thursday as Wall Street reeled from Federal Reserve Chairman Jerome Powell’s claims that hopes for a policy change were “premature” after the central bank posted a fourth straight hike. interest rate of 75 basis points.
The S&P 500 (^GSPC) sank 1.1% after the index fell 2.5% in the previous session, its worst one-day Fed loss since January 2021, according to Bloomberg data. The Dow Jones Industrial Average (^DJI) lost 150 points, or 0.5%, and the technology-focused Nasdaq Composite (^IXIC) fell 1.7%.
Meanwhile, Treasury yields rose, with the key 10-year note inching toward 4.2% and the rate-sensitive 2-year yield above 4.7%. The US dollar index also rose.
The S&P 500’s 2.5% loss on Wednesday marked its 54th decline of 1% or more in 2022, the worst downside volatility since 2009, according to Charlie Billello of Compound Advisors.
US investors also turned their attention to the action across the Atlantic, with the Bank of England following the Fed’s lead, also raising interest rates by three-quarters of a percentage point.
Wednesday’s hike brings the Fed’s benchmark policy rate, the federal funds rate, to a new range of 3.75% to 4%, its highest level since 2008. Although the move was in line with expectations , shares sank after Powell indicated that officials may raise interest rates. above the 4.6% previously estimated, indicating that further tightening is certain, even after the policy statement implied that the increases could be smaller.
“The market initially viewed the November FOMC statement as dovish, but an aggressive press conference prompted a near total reversal of these moves due to comments that the ‘low level’ rate hikes will be higher than expected’ and it is ‘premature to think about pausing rate hikes,'” Bank of America economists led by Michael Gapen said.
The FOMC statement also acknowledged the lagged effects of cumulative monetary tightening, suggesting greater attention by the rate-setting group to concerns about economic growth.
Investors now turn their attention to the all-important jobs report at 8:30 am ET on Friday. Figures from the labor department are projected to show a payroll gain of 190,000 for October, according to Bloomberg estimates. The print, if made, would mark a drop from figures seen during the pandemic recovery, but reflect still-strong hiring, with pre-COVID payrolls averaging 150,000-200,000 per month.
Powell also said in his speech that “the labor market remains unbalanced, with demand substantially outstripping the supply of available workers.”
In corporate news, Elon Musk is reportedly planning to cut about half of Twitter’s workforce (3,700 of roughly 7,500 employees), according to a report by Bloomberg News, just a week after closing a lengthy bid to buy the networking platform. Social Security in a $44 Billion Settlement.
On the earnings side, shares of Qualcomm (QCOM) sank about 8% on Thursday after the smartphone chipmaker issued a forecast below estimates, citing macroeconomic headwinds and COVID lockdowns. in China.
Shares of Roku (ROKU) fell 5% after the company warned of economic pressures and weakness in ad sales, while forecasting a larger-than-expected loss for the current quarter.
Meanwhile, shares of Etsy (ETSY) surged nearly 15% after the online marketplace reported third-quarter revenue that beat analysts’ expectations.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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