Stocks are falling after rate hikes, according to Powell

Stocks are falling after rate hikes, according to Powell

US stocks eased in volatile afternoon trading on Wednesday as the Federal Reserve dealt with another interest rate hike in its fight against stubborn inflation.

The US central bank raised its benchmark policy rate by 0.75% for the third time in a row, bringing the federal funds rate to a new range of 3.0% to 3.25% — the highest level since 2008 — from a current range of 2.25% to 2.5%.

The S&P 500 and Dow Jones Industrial Average each lost about 1.7%, while the tech-heavy Nasdaq Composite was down 1.8%. Meanwhile, the CBOE Volatility Index (^VIX) – a measure of Wall Street’s “fear” – briefly rose above 30 for the first time since July 1st.

“Restoring price stability is critical to setting the stage for achieving maximum employment and stable prices in the long run,” Fed Chairman Powell said in his speech after the meeting. “We will keep it until we are confident that the work is done.”

There was a focus on activity across the bond market following the policy announcements. Treasury yields continued their perilous contraction on Wednesday, with the rate-sensitive 2-year Treasury note surpassing 4.1% – the highest level since 2007. The benchmark US 10-year note was above 3.5%, the highest level since 2011 for.

“You can only steer the ship into the storm for so long, but eventually there will be a time when you have to put the hats down and with the Fed’s third 75 basis point hike in the last four months, participants should the market to be looking. for cover for the coming storm,” said Charlie Ripley, senior investment strategist at Allianz Investment Management in a note. “Overall, today’s policy action is very reflective of the economic backdrop and in order to slow the economy, the Fed clearly needs to be aggressive.”

Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, U.S., July 27, 2022. REUTERS/Elizabeth Frantz

Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, U.S., July 27, 2022. REUTERS/Elizabeth Frantz

Among the market movers on Wednesday was General Mills ( GIS ), which rose nearly 6% after the company reported better-than-expected quarterly earnings and raised its full-year sales outlook as it benefits from higher prices on breakfast cereals, snack bars and pets. food

Shares of Beyond Meat (BYND) gave up an earlier gain after announcing a partnership with Taco Bell (YUM) on their first menu collaboration: Beyond Carne Asada Steak. The news comes after the meat substitute producer suspended Chief Operating Officer Doug Ramsey following his arrest over allegations he bit a man’s nose this weekend during an altercation.

Elsewhere, shares of Stitch Fix ( SFIX ) rose nearly 3% after the company reported fourth-quarter revenue expectations and sales guidance and posted a decline in active clients.

Across the Atlantic, Russian President Vladimir Putin announced a “partial mobilization” of Ukraine and pledged territories under the occupation of its annex. In a televised message, he called for the measures to be “urgent, necessary steps to protect Russia’s sovereignty, security and territorial integrity.”

The threat of a Russian war against Ukraine led to a sharp increase in the markets. Oil prices rose, with West Texas Intermediate (WTI) and Brent crude futures rising, although both ended the day lower. The dollar also rose to a fresh record high and the euro slipped. In crypto markets, bitcoin (BTC-USD) fell back below $19,000 before rallying to finish the day slightly higher.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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