Market Snapshot: U.S. stocks extend losses after Fed Chair Powell’s comments, ahead of monthly jobs data

by | Nov 3, 2022 | Stock Market

U.S. stocks traded lower on Thursday afternoon as investors absorbed comments by Federal Reserve Chairman Jerome Powell on Wednesday, signaling more interest rates rises, while also positioning for the October employment report due Friday. How stocks are trading
The S&P 500
SPX,
-0.46%
fell 21 points, or 0.6%, to 3,737.

The Dow
DJIA,
+0.05%
was off 68 points, or 0.2%, to 32,075.

The Nasdaq Composite
COMP,
-1.69%
shed 114 points, or 1.1%, to 10,409.

On Wednesday stocks were volatile with the S&P 500 and Nasdaq logging their largest one-day drop since Oct. 7. As of early Thursday, the Nasdaq had traded at its lowest level since Oct. 14, while the S&P 500 briefly touched its lowest level since Oct. 21 and the Dow reached its lowest level since Oct. 26 before paring losses.

What’s driving markets The Fed on Wednesday delivered the expected 75 basis point hike in its benchmark interest rate target to a range of 3.75% to 4%. However, investors fixated on comments made during Powell’s press conference which suggested that the Fed is nowhere near pausing its campaign of raising interest rates. “It is very premature to be thinking about pausing. When people hear lags, they think about pauses. It’s very premature, in my view, to talk about pausing our rate hikes. We have a way to go,” Powell said. He also suggested that the Fed’s benchmark rate may need to top the level of core inflation to stamp out inflation, a hint that the Fed funds rate may need to be pushed above 5% and left there for a while to succeed in dragging inflation back down to its 2% target. See: Opinion: How Powell pivoted away from the Fed’s dovish message and tanked the markets Eric Diton, president and managing director of the Wealth Alliance, blamed the backlash in equity prices on the dashing of investors’ hopes that Powell might signal that the end of the Fed’s tightening cycle might be near. “Powell has been crystal clear that this is not a short-term tightening event,” Diton said. “They plan to keep rates tighter for a while and until they see a response from inflation.” See also: Live Markets Blog And even if they opt for smaller rate rises in December and January, Powell is telegraphing to investors that the terminal rate might ultimately need to rise even higher than many investors had previously anticipated, said Gene Goldman, chief investment officer of Cetera Financial Group. Expectations for a higher terminal rate were reflected in Fed funds futures, which track expectations surrounding where the Fed’s key be …

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