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Wall St slips as Powell continues hawkish stance According to Reuters

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© Reuters. FILE PHOTO: Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, U.S., July 27, 2022. REUTERS/ Elizabeth Frantz

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By Sruthi Shankar and Ankika Biswas

(Reuters) – U.S. stock indexes tumbled on Thursday after a broad-based rally in the session before hawkish comments by Federal Reserve Chairman Jerome Powell bolstered bets on a wave another big interest rate hike later this month.

The Fed is “strongly committed” to controlling inflation but there is still hope it can be done without the “very high social costs” associated with the previous inflation war, Powell said in a statement. Conference of the Cato Institute.

“He is clearly maintaining his existing hawkish tone and the market still seems to be surprised, so they are selling off,” said Randy Frederick, managing director of derivatives and trading. it” Charles Schwab (NYSE:) in Austin, Texas.

Wall Street’s main indexes hit their highest in about a month on Wednesday as bond yields fell after a recent rally on expectations of higher interest rates. However, the benchmark is still nearly 8% away from the August peak and down about 17% so far.

Hawkish statements from Fed officials and recent data signaling the strength of the US economy have prompted money markets to bet that the Fed will raise rates by 75 basis points at this month’s meeting. . Fed fund futures imply that traders are pricing in an almost 90% chance of such a move.

Goldman Sachs (NYSE:) also raised its policy rate forecast to a 75 basis point increase this month from 50 basis points previously.

Data showed the number of Americans filing new jobless claims last week fell to a three-month low, underscoring the strength of the labor market even as the Fed raises interest rates.

Recession fears, stirred by aggressive central bank rate hikes and signs of recession in China and Europe, have dampened appetite for risky assets. risk globally this year.

The European Central Bank raised its key interest rate by an unprecedented 75 basis points on Thursday and signaled further hikes. That follows major rate hikes from the Bank of Canada and the Reserve Bank of Australia earlier this week.

At 10:02 a.m. ET, the index was down 103.90 points, or 0.33%, at 31,477.38, the S&P 500 was down 10.81 points, or 0.27%, at 3,969. .06 and down 32.85 points, or 0.28%, at 11,759.05.

Eight of the S&P’s 11 major sectors fell, with consumer staples and media services leading the way. Financials rose 0.5%, tracking the rise in yields. [US/]

GameStop Corp (NYSE:) rose 2.7% after the video game retailer reported a smaller-than-expected quarterly loss.

American Eagle Outfitters (NYSE: Inc) fell 9.6% after the retailer missed its second-quarter profit estimate and said it would pause its quarterly dividend to shore up its finances against the impact of inflation.

There were more losers than advancers by 1.85 to 1 on the NYSE and 1.42 to 1 on the Nasdaq.

The S&P index recorded three 52-week highs and seven new lows, while the Nasdaq recorded 20 new highs and 90 new lows.

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