Market Extra: The Dow tumbled 500 points because Jerome Powell’s Fed ‘isn’t going to blink’

by | Sep 21, 2022 | Stock Market

It took stock-market investors a while to make up their minds, but when the closing bell sounded on Wednesday it was clear they didn’t like what they had heard from the Federal Reserve and its chairman Jerome Powell. U.S. stock indexes finished sharply lower after swinging between gains and losses after the Fed raised the fed-funds rate by 75 basis points to a target range of 3% to 3.25%. That was expected.

See: Fed approves third large interest rate hike and signals more before year-end Central bankers also penciled in another 125 basis points in rate hikes by year end, which would bring the benchmark interest rate to a midpoint of 4.4% by the end of the year, plus a “terminal” rate — or peak — at 4.6% in 2023. They don’t expect any rate cuts until 2024.  Analysts said the projections and Powell’s comments drove home the same message that the Fed chair delivered in a speech at a monetary policy symposium in Jackson Hole, Wyoming, in late August: the Fed intends to keep tightening until it gets inflation under control. “He’s clearly intent on showing the market that he means what he says, that he’s not going to blink,” said Mel Casey, senior portfolio manager at FBB Capital Partners, in a phone interview. “He’s not going to worry about what the market does. For too long people have considered that that is a concern as well, but the concern here is inflation.”  See: Can the Fed tame inflation without further crushing the stock market? What investors need to know. The Dow Jones Industrial Average
DJIA,
-1.70%
booked a fall of over 500 points, o …

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