Dow drops 650 points as U.S. stocks fall sharply after Powell warns of pain to households in inflation battle

Federal Reserve Jerome Powell said US stocks were sinking Friday afternoon, adding that the central bank would continue its fight against inflation “until the job is done” to get back the cost of living at its 2% target.

See: Fed’s Powell makes blunt remarks on Jackson Hole, saying lowering inflation will hurt homes and businesses

How are you doing stock trading?
  • Dow Jones Industrial Average DJIA,
    -2.22%
    It fell 662 points, or 2%, to around 32,649.

  • s&p 500 spx,
    -2.58%
    was down 97 points, or 2.3%, at around 4,101.

  • Nasdaq Composite Comp,
    -3.15%
    fell 360 points, or 2.9%, to 12,278.

For the week, the Dow is headed for a 3.1% decline, while the S&P 500 is on track for a 2.9% decline and the Nasdaq is on pace to lose 3.2%, FactSet data shows, in the last investigation.

What is driving the market?

US stocks fell sharply on Friday, with losses led by the technology-heavy Nasdaq Composite, after Federal Reserve Chairman Jerome Powell reiterated his resolve to bring rising inflation under control through higher interest rates.

In comments that sounded even harsher than many investors expected, Powell sought a less aggressive monetary policy stance to dispel any expectation that the central bank would continue in its inflation fight, even if it meant some near-term. period economic pain for American families.

“Continuing periods of below-trend growth may be needed to moderate inflation,” Powell said. “Higher interest rates, slower growth and soft labor market conditions will reduce inflation, but they will also bring some pain to households and businesses.”

As US stocks tumbled Friday afternoon, the S&P 500’s information-technology IUIT,
,
Communication Services SP500.50,
-3.09%
and Consumer-Discretionary Sector SP500.25,
-3.10%
Looking at the biggest pitfalls, the FactSet data shows in the last investigation. All three sectors fell about 3%, as growth stocks suffered overpriced.

“It seems like investors have literally been on the beach all summer and have forgotten the problems that exist financially,” Ryan Belanger, founder and managing director of Claro Advisors, said in a phone interview Friday. “This morning, Chair Powell’s remarks re-focused the lens here.”

Jake Jolly, senior investment strategist at BNY Mellon Investment Management, said Powell’s comments reinforced his tough stance.

“The market was clearly set up for the speech to ‘stick to the script’ and the initial impression is what Chair Powell delivered – and he did it in less than 10 minutes,” Jolly said. “The main thing is that they closed the door on the idea that the Fed is going to have a short-term pivot on policy.”

Reading: How do stocks perform as central bankers gather in Jackson Hole each year?

As the sell-off intensifies, Wall Street’s “fear gauge,” the CBOE Volatility Index VIX,
+10.19%
Was around 22. It briefly topped the first 24 in the week. Treasury yields also rose in response to Powell, with the spread between the two-year and 10-year Treasury yields moving into inverted territory.

Before Powell’s remarks, a batch of fresh economic data was released, including a reading on the Fed’s preferred inflation gauge, the personal-consumption-spending index. Headline PCE fell 0.1% for July and 6.3% year over year to 6.8%. Core PCE, which does not include food and energy prices and is closely watched by Fed policymakers, rose 0.1% on a month-to-month basis, but by a slightly larger volume than expected, at 4.6% year-over-year. Done. 4.8%.

Reading: For the first time in 20 months, inflation fell in July, key gauge shows

Personal income rose 0.2% in July, while consumer spending rose 0.1%, below forecast. The US trade deficit narrowed 9.7% in July, while inventories rose.

As Powell noted, investors also got an update from a University of Michigan consumer sentiment survey that showed consumers’ outlook on the economy improved in August, while medium- and long-term inflation expectations remained moderate.

Which companies are in focus?
  • Electronics Arts Inc.
    ea,
    +4.78%
    Shares rose 4.7% even after denying earlier rumors about a potential deal Amazon.com Inc.
    AMZN,
    -4.05%,

  • shares of Dell Technologies Inc.
    Dale,
    -11.61%
    PC sales fell more than 11% in the second quarter after a jump in pandemic-induced PC sales, officials said. Revenue fell short of analysts’ expectations.

  • Gap Inc.
    GPS,
    -1.45%
    She shed 1.5%, erasing earlier gains after an earnings report that slightly beat Wall Street’s expectations.

  • Meta Platform Inc.
    meta,
    -3.38%
    The mega-cap was down more than 3% on Powell’s scathing remarks due to a drop in the ‘FAANG’ names. Amazon was down more than 3%, while Apple Inc.
    AAPL,
    -3.04%
    had fallen 2.7% and Netflix Inc.
    nflx,
    -3.75%
    dropped 3.4%.

How is the condition of the other properties?
  • Yield on 10 Year Treasury Note TMUBMUSD10Y,
    3.036%
    was up nearly one basis point at 3.04%, while the two-year Treasury yields TMUBMUSD02Y,
    3.396%
    increased by four basis points to 3.43%.

  • ICE Dollar Index DXY,
    +0.26%
    was up 0.3%.

  • Crude Oil Prices CL.1,
    +0.23%
    October deliveries were lower with West Texas Intermediate crude for CLV22,
    +0.23%
    It fell 0.3% to $ 92.23 per barrel.

  • gold futures GC00 December deliveries were down with gold for GCZ22,
    -1.13%
    fell 1.3% to $1,747.80 an ounce.

  • Bitcoin BTCUSD Drop below $20,500, down more than 4%.

B. But listen to Carl IcahnEast New Ideas at the Money Festival September 21 and September 22 in New York. Veteran traders will share their thoughts on this year’s wild market ride.

,—Barbara Colmeyer contributed to this report.

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https://www.marketwatch.com/story/u-s-stock-futures-slip-as-investors-await-fed-chairman-powells-jackson-hole-address-11661508928?siteid=yhoof2&yptr=yahoo

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