Why is the stock market down today? It finally heard Jerome Powell’s message loud and clear.

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Jackson Hole came and went, and the only surprise might be the stock market was surprised.

But surprisingly it was. The stock market kicked off last week on its comeback foot, an appropriate response as investors seemed to realize that they may have overestimated the chances of a dovish Federal Reserve. However, the market get back the land heads into Friday’s meeting, as investors buy in at a discount. Afterward, Chairman Jerome Powell began to speak. He told symposium attendees that the Fed needed to bring inflation back to its 2% target, that doing so would take time and that another big rate hike could happen in September. expression, which can last 30 minutes, lasts only 10 minutes.

“Fed Chairman Jerome Powell’s speech today at the Fed’s Jackson Hole conference was brief and blatant,” wrote Ed Yardeni, investment strategist at Yardeni Research. “He quashed any lingering expectations that the Fed would— pause its tightening and possibly lower interest rates next year. “

He was ever, and the markets don’t miss the message. The Dow Jones Industrial Average fell 3% on Friday and ended the week down 4.3%, while

S&P 500

The index fell 3.4% to close the week down 4%. It was their worst week since June.

It’s not that investors worry about what’s going to happen at the next meeting. Follow CME FedWatch Tool, the futures market is pricing in a 61% chance of a three-quarter point rate hike after Powell spoke on Friday, down from 64% a day earlier. The real fear seems to be not about the size of the next rally, but when the rallies stop and how long rates will stay high – even if it means triggering a recession. “[We] Thomas Mathews, market economist at Capital Economics, writes. “That, we suspect, means the central bank will remain a headwind for markets for some time.”

And especially for expensive growth stocks. No wonder the technology is heavy

Nasdaq Composite

bear the brunt of the damage, falling 3.9% on Friday to end the week down 4.4%. That makes sense, given that Expensive growth stocks most sensitive to rising interest rates and stocks like

Nvidia

(code: NVDA) and

Trading desk

(TTD), trading with earnings of 42.7 and 57.9 times respectively, is still not cheap.

However, investors can’t seem to give them up. According to data from Goldman Sachs, growth mutual funds loaded into stocks that traded at 20 times business value/sales or more in the second quarter of the year. That means adding stocks like

Snowflakes

(SNOW), Trade Desk and Nvidia, among others. That has worked well during the turnaround from the June lows, but could be especially painful if the Fed is to raise interest rates higher than investors expected. Wolfe Research strategist Chris Senyek writes.

It could make for a tough walk between now and the next Fed meeting on September 2.

Write letter for Ben Levisohn at [email protected]