Stocks See Roller-Coaster Ride With Hawkish Fed: Markets Wrap
Added 09-21-22 04:04:02pm EST - “(Bloomberg) -- Stocks saw some crazy gyrations, with traders overwhelmed by the many headlines that followed the Federal Reserve decision and Jerome Powell's press conference that ended up signaling at least one thing: monetary policy…” - News.yahoo.com
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(Bloomberg) -- Stocks saw some crazy gyrations, with traders overwhelmed by the many headlines that followed the Federal Reserve decision and Jerome Powell’s press conference that ended up signaling at least one thing: monetary policy will remain aggressively tight.
The S&P 500 tumbled -- pushing its slide from a January record to more than 20%. The gauge struggled to find direction in the aftermath of the Fed announcement, climbing as much as 1.3% at one point. The two-year rate topped 4%, piercing that mark for the first time since 2007. The dollar rallied.
Fed Chair Jerome Powell said officials were “strongly committed” to curbing inflation after they raised interest rates by 75 basis points for a third straight time and signaled a potential move of that magnitude in November. Powell said his main message was that officials were “strongly resolved” to bring inflation down to the Fed’s 2% goal and added that “we will keep at it until the job is done.” The phrase invoked the title of former Fed chief Paul Volcker’s memoir “Keeping at It.”
“Jerome Powell almost channeled his inner Paul Volcker today, talking about the forceful and rapid steps the Fed has taken, and is likely to continue taking, as it attempts to stamp out painful inflation pressures and ward off an even worse scenario later down the line,” said Seema Shah, chief global strategist at Principal Global Investors. “With the new rate projections, the Fed is engineering a hard landing – a soft landing is almost out of the question.”
“It seems like the market is wrestling with the possibility of higher rates at year-end on the one hand, and possibly getting the bulk of the rate hike cycle done sooner on the other hand. I think it’s fair to say this was a slightly hawkish surprise, but markets were expecting them to err on the hawkish side,” said Sameer Samana, Wells Fargo Investment Institute senior global market strategist.
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