Dow down 400 points as investors fret over Fed inclination to push rates higher
U.S. stock losses mounted midsession Tuesday as investors soaked in Federal Reserve Chairman Jerome Powell’s hawkish message to Congress that the central bank will not rule out bigger interest rate rises in order to tame stubborn inflation.
In February, the Fed raised the federal funds rate by 25 basis points, a more gradual pace, but the takeaway from his speech is a future 50 basis point hike could be in play. The Fed’s next meeting on interest rates is scheduled for March 21-22. Powell will also be quizzed by the House of Representatives’ Financial Services Committee on Wednesday.
Not this time, said Stanley. “Today’s speech reminds me of that Jackson Hole speech. It is short and to the point. More importantly, it is significantly more hawkish than I anticipated.” “Powell has a great way of smoothing over the rough spots. I think what caught people by surprise is the unvarnished hawkisness, rather than his comments where he can sometimes balance his hawkishness with something more market friendly,” Steve Sosnick, chief strategist at Interactive Brokers IBKR, +0.45%, said in a phone interview.
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