US stocks trend lower after Fed chief’s speech on Friday
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U.S. stocks fell overnight following remarks on Friday by Fed Chairman Jerome Powell signaling higher interest rates for a longer period in an attempt to curb inflation, even as disappointed investors hoped the central bank would start easing rates to help the economy.
The Dow Jones Industrial Average fell more than 1,000 points on Friday after Powell promised to continue to fight inflation, even at the expense of economic growth.
In the highly anticipated speech, Powell said the Fed must keep raising interest rates and keep them high until inflation is under control. His comments disappointed investors who had hoped inflation had peaked and the Fed would switch from raising rates to cutting sometime next year.
Friday’s selloff capped two straight weeks of losses for major equity indices and largely wiped out market gains since late July. Tech stocks that were flying high earlier this summer took a particular beating, with Amazon.com and Netflix both falling more than 4% for the day.
The Dow Jones lost 1,008.38 points, or 3%, to 32,283.40, the biggest one-day drop for the blue-chip index since May. The S&P 500 fell 141.46 points, or 3.4%, to 4057.66. The tech-focused Nasdaq Composite slid 497.56 points, or 3.9%, to 12,141.71.
The indices were little changed before the keynote, then steadily declined throughout the session, with losses accelerating until the closing bell.
All three indexes were down more than 4% on the week, after rising and falling as investors weighed concerns over Fed tightening against economic data that pointed to underlying strength in the economy. American economy.
Powell’s comments at the Fed summit in Jackson Hole, Wyoming, highlighted how the central bank is preparing to move from a phase of rapid and large rate hikes to one in which it is focused on achieving ‘a level of interest rates that slows hiring, spending, and growth, and then stays at that level for a period of time.
Meanwhile, Asian stocks fell on Monday.
Japan’s benchmark Nikkei 225 fell 2.7% in afternoon trade to 27,881.87. Australia’s S&P/ASX 200 fell 2.0% to 6,965.50. The South Korean Kospi fell 2.2% to 2,427.28. Hong Kong’s Hang Seng slid 0.8% to 20,004.49, while the Shanghai Composite recouped earlier losses to rise less than 0.1% to 3,237.82.
“The risky mood is also evident in today’s Asian session as bearish sentiments continue with the sell off on Wall Street that ended last week while US futures continue to rise. suggest no reprieve in the new week,” Yeap said. Jun Rong, market strategist at IG in Singapore.
Chinese economic data over the weekend is also weighing on regional sentiment and seems to indicate that a strong recovery will take time. China’s January-July industrial profits fell 1.1% from a year ago amid new COVID-19 restrictions.