Stocks sold off sharply Tuesday after comments from Federal Reserve Chair Jerome Powell suggested that rates may need to go higher for longer, fueling fears of a potentially larger rate hike at the central bank's next policy meeting.
The Dow Jones Industrial Average was last down 303 points, or 0.9%, while the S&P 500 traded about 1% lower. The Nasdaq Composite dropped 0.8%.
"The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated," Powell said in remarks prepared for two appearances this week on Capitol Hill. "If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes."
The comments seemed to suggest that the Fed may implement a larger rate hike than last month's 25 basis point increase at its next policy meeting on March 21-22.
At the same time, Powell's remarks could mean that the peak rate for federal funds, also called the terminal rate, will likely go higher than previously expected, despite investor hopes that the Fed might have stopped hiking soon.
"This isn't surprising news, but it's a tough reminder for markets after such a brisk rally," said eToro U.S. investment analyst Callie Cox. "The Fed's top priority is getting inflation down, and for good reason. People are starting to factor in persistently higher inflation, which could be the worst-case scenario for long-term investors and run the risk of prices spiraling higher."
In other news, Dick's Sporting Goods shares popped more than 7% on a strong holiday quarter. WW International leapt more than 30% on plans to acquire a subscription telehealth platform focused on chronic weight management.
Investor attention remains laser-focused on February's jobs report slated for Friday, after January's blockbuster number showed a resilient labor market despite the Fed's aggressive hiking.
https://news.google.com/rss/articles/CBMiRGh0dHBzOi8vd3d3LmNuYmMuY29tLzIwMjMvMDMvMDYvc3RvY2stbWFya2V0LXRvZGF5LWxpdmUtdXBkYXRlcy5odG1s0gFIaHR0cHM6Ly93d3cuY25iYy5jb20vYW1wLzIwMjMvMDMvMDYvc3RvY2stbWFya2V0LXRvZGF5LWxpdmUtdXBkYXRlcy5odG1s?oc=5
2023-03-07 16:15:00Z
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