All 11 major S&P 500 sectors posted declines, with the indices of tinformation technology, communication services and discretionary consumption among the indices with the greatest decline.
The Nasdaq led the falls among the three benchmarks in the market, dragged by the high-growth tech stocks that plunged after picking up on Thursday in anticipation of Powell’s speech at the Jackson Hole central banking conference in Wyoming.
The US economy will need a tight monetary policy “for some time” before inflation is under control, which will mean slower growth, a weaker job market and “some pain” for households and businesses, Powell said, warning there is no quick cure for soaring prices. .
Investors knew new rate hikes were coming, and have been torn between expecting a 75 basis point hike or a 50 basis point hike at the Fed’s September meeting.
Nevertheless, recent data highlighting continued strength in the labor market, offsetting two consecutive quarters of negative economic growth, had led some to speculate on the possibility of a more moderate pace of increases.
“The pullback comes from the idea that it’s not about the pace of hikes going forward and how they tighten financial conditions, but the duration of staying in that tight monetary policy stance.”said Garrett Melson, portfolio strategist at Natixis Investment Managers.
“That’s the nuance they’re trying to push and Powell was maybe a little more explicit on that today. But if you’ve listened to other Fed officials in the last few weeks, it’s the same message.”
Source: Ambito
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