Medicare Agent News: Not What Traders Wanted

Tuesday, March 7, 2023

Not What Traders Wanted

By Connor Smith | Tuesday, March 7

Tug of War. Stocks fell today after Federal Reserve Chair Jerome Powell's latest testimony sounded more hawkish than Wall Street anticipated.

The Dow Jones Industrial Average fell 1.7%, snapping a four session winning streak. The S&P 500 fell 1.5%, while the Nasdaq Composite fell 1.2%. Stocks took a beating across the board: All 11 sectors of the S&P 500 fell 0.9% or more.

Powell told Congress the Federal Reserve expects to raise interest rates multiple times in the coming months and would be prepared to reaccelerate its pace of tightening if needed, writes Barron's Megan Cassella.

Powell, who testified before the Senate Banking Committee as part of his semiannual visit to Capitol Hill, also acknowledged that stronger-than-expected economic data in January suggests “that the ultimate level of interest rates is likely to be higher than previously anticipated.”

“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,” Powell said. “Restoring price stability will likely require that we maintain a restrictive stance of monetary policy for some time.”

Throughout more than two hours of testimony, Powell made clear that the central bank is on high alert. He defended the Fed’s commitment to returning inflation to its 2% target and said that, while the central bank sees unemployment rising, it isn’t trying to throw people out of work.

The Fed is aware the full impact of its tightening efforts so far have yet to be fully felt, Powell said, adding that he sees no evidence in the economic data that the bank has gone too far. “Indeed, it suggests that there’s still work to do,” he told lawmakers.

Oanda analyst Edward Moya writes that Powell "killed risk appetite" with his hawkish comments.

"U.S. stocks did not stand a chance after Fed Chair Powell convinced markets that policymakers are comfortable taking this rate hiking campaign much higher," Moya adds. "Powell is not taking any chances and wants to send home a clear message that the Fed will do whatever it takes to bring down inflation."

In the tug of war over monetary policy, the hawks are winning again, which makes make Friday's jobs report even more pivotal. A cooler-than-expected report could give the doves new hope.