Federal Reserve Chairman Jerome Powell after a press conference following the two-day meeting of the Federal Open Market Committee in Washington, USA, July 27, 2022. (REUTERS/Elizabeth Frantz)
The Nasdaq plunged Wall Street on Friday, sparking a sell-off in growth and technology stocks after Federal Reserve Chairman Jerome Powell suggested the central bank would keep raising rates to keep inflation in check. rice field.
Speaking at the Jackson Hole Central Bank Conference in Wyoming, Powell said the U.S. economy will need tight monetary policy “for a while” until inflation is contained.
That means slower growth, a weaker job market and “some pain” for households and businesses, he added.
“His comments are hawkish and he is going all out when it comes to policies to fight inflation,” said Lindsay Bell, chief money and market strategist at Ally.
All 11 major sectors of the S&P 500 fell in intraday trading, with information technology, communication services and consumer discretionary stocks down 2.5% to 3.1%.
With a heavy focus on large-cap growth and technology stocks, US 2-year Treasury yields stabilized at a two-month high after briefly reaching their highest level since October 2007.
High-growth and tech stocks such as Nvidia Corp and Amazon.com Inc fell 6.0% and 3.2% respectively after surging in the previous session.
Economically sensitive banks fell 1.9%.
“The market has reacted quite negatively because when you look at the Fed fund rate forecasts for this year and next year, the market expected the Fed to pull back next year. No,” said Bell.
U.S. stock indices have fallen since the start of the year as investors slashed prices on expectations of aggressive rate hikes and a slowing economy.
But they’ve rebounded strongly since June, with the S&P 500 recouping nearly half of its losses this year on hopes of stronger-than-expected quarterly earnings and inflation peaking.
Traders were still divided between a 75 basis point and 50 basis point rate hike by the Fed, but economists expect the central bank to raise rates by 50 basis points at next month’s meeting.
At 11:45 am ET, the Dow Jones Industrial Average fell 568.91 points (1.71%) to 32,722.87, the S&P 500 fell 86.30 points (2.06%) to 4,112.82, and the Nasdaq Composite fell 330.25 points (2.61). did. %, at 12,309.02.
Earlier data showed little growth in consumer spending in July, but the much lower inflation could give the Fed room to scale back its aggressive rate hikes.
Dell Technologies Inc fell 11.9%, joining rivals forecasting a slowdown as runaway inflation and a downturn in the economic outlook prompt consumers and businesses to tighten their purse strings.
Affirm Holdings Inc fell 20.7% after buy-now-pay-later lenders forecast full-year earnings below Wall Street estimates, signaling a broader downturn in the fortunes of the once-booming fintech sector. emphasized.
Losers outnumbered gainers by a ratio of 5.65 to 1 on the NYSE and 4.74 to 1 on the Nasdaq.
The S&P index posted 3 new highs and 32 new lows in 52 weeks, while the Nasdaq posted 24 new highs and 92 new lows.