Market Snapshot: Dow drops more than 500 points as Powell vows to fight inflation ‘until the job is done’

by | Aug 26, 2022 | Stock Market

U.S. stocks tumbled Friday, with the Dow Jones Industrial Average dropping more than 500 points, as Federal Reserve Jerome Powell affirmed that the central bank will continue its battle against inflation “until the job is done”. See: Fed’s Powell, in blunt remarks at Jackson Hole, says bringing down inflation will cause pain to households and businesses

How are stocks trading?
S&P 500
SPX,
-2.19%
was down 83 points, or 2%, to 4,115.

Dow Jones Industrial Average fell 536 points, or 1.6%, to 32,755.

Nasdaq Composite
COMP,
-2.72%
fell 315 points, or 2.5%, to 12,321.

Thursday marked the best session in two weeks for all three major indexes, with the S&P 500
SPX,
-2.19%
rising 1.4% to 4,199.12, the Dow industrials
DJIA,
-1.86%
climbing 322.55 points, or 1%, to close at 33,291.78 and the Nasdaq Composite 
COMP,
-2.72%
advancing 1.7% to 12,639.27.What’s driving the market? In remarks that largely hewed to expectations, Federal Reserve Chairman Jerome Powell tried to dispel any hopes for a less-aggressive monetary policy stance by insisting that the central bank will persist in its inflation fight, even if that means causing some near-term economic pain for American families. “Reducing inflation is likely to require a sustained period of below-trend growth,” Powell said. “Moreover, there will very likely be some softening of labor market conditions. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” he added. Jake Jolly,  senior investment strategist at BNY Mellon Investment Management, described Powell’s remarks as decidedly hawkish. “The market was pretty clearly set up for a hawkish ‘sticking to the script’ type of speech and the initial impression is that was what Chair Powell delivered — and he did in in less than 10 minutes,” Jolly said. “The key takeaway is he closed the door on this idea that there is going to be a short-term pivot on Fed policy,” he added. Opinion: The Federal Reserve’s Powell has a lot of explaining to do Read: How stocks perform as central bankers gather each year at Jackson Hole Ahead of Powell’s remarks, a batch of fresh data was released, including the headline PCE inflation index, which dropped 0.1% for July and to 6.3% from 6.8% annually. The core PCE price index, closely watched by Fed policy makers, rose 0.1% on a one-month basis but decelerated by a slightly bigger-than-expected amount to a 4.5% year-over-year rate, from 4.8%, Read: Inflation falls in July for the first time in 20 months, key gauge shows Personal incomes climbed 0.2% in July, while consumer spending rose 0.1%, below forecast. The U.S. trade in goods deficit sank 9.7% in July, while inventories rose. As Powell spoke, investors also received an update from the University of Michigan’s survey of consumer sentiment, which showed that consumers’ outlook on the economy improved in August, while medium- and long-term inflation expectations continued to moderate. What companies are in focus?
Electronics Arts Inc.
EA,
+4.22%
shares climbed 6.1% despite reports denying a potential deal with Amazon.com Inc.
AMZN,
-3.38%.

Shares of Dell Technologies Inc.
DELL,
-12.13%

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