US stocks rocked by wild swings after aggressive Fed stance – BNN Bloomberg

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Stocks saw some wild swings, with traders overwhelmed by the many headlines that followed the Fed’s decision and ended up signaling at least one thing: Policy will remain aggressively tight, making the odds of a soft landing look more and more elusive.

The S&P 500 finished near session lows, pushing its slide from a January record to more than 20 percent. The gauge turned around after the Fed’s announcement, rising as much as 1.3 percent at one point. Two-year Treasury yields topped 4 percent, topping that mark for the first time since 2007. The dollar rallied.

Jerome Powell vowed officials would squash inflation after they raised interest rates by 75 basis points for the third straight time and signaled hikes even more aggressive than investors expected. Powell said the main message from him was that officials were “strongly determined” to bring inflation down to the Fed’s 2% target, adding “we’ll keep it up until the job is done.” The phrase invoked the title of former Fed chief Paul Volcker’s memoir, “Keeping at It.”

Jerome Powell almost channeled his inner Paul Volcker today, talking about the swift, forceful steps the Fed has taken, and is likely to continue taking, in its bid to quell painful inflation pressures and avert an even worse scenario down the road. said Seema Shah, chief global strategist at Principal Global Investors. “With the new rate projections, the Fed is engineering a hard landing; a soft landing is almost out of the question.”

Officials forecast rates to hit 4.4 percent by the end of this year and 4.6 percent in 2023, a more aggressive shift than expected in their so-called dot plot. That implies that a fourth consecutive increase of 75 basis points could be on the table for the next meeting in November, about a week before the US mid-term elections.

More comments:

  • “We think the markets, and thus the economy, will get ‘fed up’ with too much tightening, if growth (and jobs) are tangibly slowing alongside these tighter policy moves,” said Rick Rieder, BlackRock’s global investment director. fixed rent
  • “Today’s Fed action, combined with ongoing roller-coaster-like market volatility, underscores investor unease amid magnified economic and market uncertainties fueled by high inflation, corporate earnings warnings, geopolitical concerns and other factors weigh heavily on both Wall Street and Main Street. ”, said Greg Bassuk, CEO of AXS Investments.
  • “They have a short window to act aggressively and they seem eager to use it,” said Jan Szilagyi, co-founder of Toggle AI, an investment research firm.
  • “The Fed’s first set of communiques from the September meeting are unequivocally aggressive,” Evercore’s Krishna Guha said. “Macro projections point to a higher risk of a harder landing.”
  • “The Fed was late to recognize inflation, late to start raising interest rates and late to start winding down bond purchases,” said Greg McBride, chief financial analyst at Bankrate. “They’ve been playing catch-up ever since. And they’re not done yet.”

Key events this week:

  • Bank of Japan monetary policy decision, Thursday
  • The Bank of England interest rate decision, Thursday
  • US Conference Board Leading Index, Initial Jobless Claims, Thursday

Here are some of the major movements in the markets:

Stocks

  • The S&P 500 fell 1.7 percent at 4 pm New York time.
  • The Nasdaq 100 fell 1.8%
  • The Dow Jones Industrial Average fell 1.7 percent
  • MSCI World Index fell 1.5%

coins

  • The Bloomberg Dollar Spot Index rose 0.7 percent.
  • The euro fell 1.2% to $0.9847
  • Sterling fell 0.9% to $1.1281
  • The Japanese yen was little changed at 143.88 per dollar.

Captivity

  • The 10-year Treasury bond yield fell six basis points to 3.51 percent.
  • Germany’s 10-year yield fell three basis points to 1.89 percent.
  • Britain’s 10-year yield advanced two basis points to 3.31%.

raw Materials

  • West Texas Intermediate crude fell 0.7% to $83.34 a barrel.
  • Gold futures rose 0.6% to $1,681.40 an ounce.


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