4:06pm: S&P 500 down a third-straight session
The Dow closed Wednesday down 102 points, 0.3%, at 33,951, the Nasdaq Composite declined 165 points, 1.2%, to 13,502 and the S&P 500 slipped 23 points, 0.5%, to 4,366. The Russell 2000 index added 1 point to 1,867.
The S&P 500 fell for the third straight day after hitting its highest level since April 2022 last week. Federal Reserve Chairman Jerome Powell's testimony before Congress on Wednesday didn't help matters.
“Over the last several weeks, they’ve done nothing but go up, which has been a relief, and it looks like the Fed speakers this week are really going to focus on talking about, they’re going to continue to raise rates,” Bokeh Capital Partners founder Kim Forrest said.
“And I think that has given especially some of the higher flying names that are dependent on growth a pause, which is bringing down the market,” Forrest said.
12:05pm: Powell points to more interest rate increases this year
US stocks were lower in noon trading as Federal Reserve Chair Jerome Powell told Congress he expects “it will be appropriate” to raise interest rates somewhat further by the end of the year.
At midday, the Dow lost 9 points to 34,045, while the S&P 500 eased 21 points at 4,368 and the tech-heavy Nasdaq slipped 180 points to 13,487.
“While investors seemed to doubt the Fed’s commitment last week, they are less sure of themselves today, and stocks continue to push lower,” IG chief market analyst Chris Beauchamp said.
“For now the market has run out of reasons to rally, and no other catalysts are yet in sight,” he added.
Notable movers included shares of FedEx Corp, which fell as much as 2.4% after the shipping giant posted weaker-than-expected revenue for its most recent quarter.
9:35am: 'Nearly all' Fed members expect additional rate hikes
US stocks moved lower at the open as investors weighed up Fed chair Jerome Powell’s prepared remarks released ahead of his appearance before the Committee on Financial Services today.
Powell intends to tell lawmakers that nearly all members of the Federal Open Market Committee (FOMC) expect to raise interest rates further in their bid to return inflation to their 2% target.
“Nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year,” he said in his prepared remarks.
“But at last week’s meeting, considering how far and how fast we have moved, we judged it prudent to hold the target range steady to allow the Committee to assess additional information and its implications for monetary policy.”
Powell is also expected to address the state of the US banking sector.
“The recent bank failures, including the failure of Silicon Valley Bank, and the resulting banking stress have highlighted the importance of ensuring we have the appropriate rules and supervisory practices for banks of this size,” he said in his remarks.
“We are committed to addressing these vulnerabilities to make for a stronger and more resilient banking system.”
Just after the opening bell, the Dow Jones had shed 130 points or 0.4% at 33,924 points, the Nasdaq had lost 50 points or 0.4% at 13,617 points, and the S&P 500 was down 15 points or 0.3% at 4,374 points.
7:50am: Powell in the spotlight
US stocks are expected to open moderately lower on Wednesday as investors keep to the sidelines ahead of the first day of Federal Reserve chair Jerome Powell’s semi-annual report to Congress on the state of US monetary policy.
Futures for the Dow Jones Industrial Average (DJIA) fell 0.1% in pre-market trading, while those for the broader S&P 500 index also declined by 0.1% and contracts for the Nasdaq-100 were down 0.2%.
The main US indexes also closed down on Tuesday ahead of Powell’s testimony to a House of Representatives Committee when he is likely to be questioned on the Fed’s ‘dot plot’ projections which currently indicate expectations of 50 basis points of additional hikes in the second half of the year. That’s after last week’s decision to pause rate hikes after 10 consecutive increases.
The DJIA ended 0.7% lower at 34,054 on Tuesday, the Nasdaq Composite fell 0.2% to 16,667 and the S&P 500 declined 0.5% to 4,389. The small-cap Russell 2000 index slid 0.5% to 1,887.
“It’s likely that Powell will stick to his main themes from the press conference. But it’ll be interesting to see how he frames the Fed’s decision last week, as the decision to pause rate hikes came alongside upgrades to their inflation and growth forecasts, as well as a signal in the dot plot that two further hikes were expected by December,” commented Deutsche Bank’s Jim Reid.
“Powell himself has said that he expects July to be a ‘live’ meeting, and futures are pricing in a 74% chance that the Fed will deliver a hike next month. But there remains scepticism in markets that the Fed will be able to follow through on that second hike, with current terminal pricing only pointing to 23bps more hikes, rather than the 50bps indicated by the dot plot," Reid added.
Contact the author at stephen.gunnion@proactiveinvestors.com