- U.S. stocks fell on Wednesday, led by tech stocks.
- Major indexes fell throughout the day, with the tech-heavy Nasdaq dropping more than 1%.
- Powell’s comments on Wednesday left investors worried about the prospect of interest rates rising for an extended period of time.
U.S. stocks fell on Wednesday, with tech stocks leading the market decline and the S&P 500 index ending its fourth straight loss as investors adjusted interest rate expectations following Jerome Powell’s hawkish comments this week.
Nvidia led the decline in tech stocks throughout the session, with the chipmaker’s shares falling about 4%. Tech giants like Netflix, Meta, Apple and Microsoft fell across the board, and the Nasdaq fell more than 1% on Wednesday.
Investors are beginning to accept the prospect of higher interest rates for an extended period of time, thanks to March’s inflation expectations and Chairman Powell’s recent guidance on a rate cut in 2024. The Fed chair warned that central bankers need more confidence that inflation is returning to its previous level. The target is 2%, suggesting that interest rates will remain higher for a longer period of time than investors expected.
The Fed also released its April Beige Book on Wednesday, revealing that some central bank officials are concerned about the possibility of a resurgence in inflation.
“Overall, stakeholders expected inflation to remain stable at a moderate pace going forward. At the same time, stakeholders in some quarters (mostly manufacturing) “We recognized the upside risks to short-term inflation, both in production prices.” Beige Book said.
According to the CME FedWatch tool, markets currently view the Fed as unlikely to cut rates in June, pricing in only a 16% chance that the Fed will cut rates at the June FOMC meeting. Most investors expect only one or two rate cuts by the end of the year, according to December’s rate outlook, down from the six cuts expected in January.
Investors were waiting for comments from Fed officials after the closing bell and throughout Thursday, which could provide further guidance on the direction of Fed policy for the rest of the year.
Here are the U.S. indices as of Wednesday’s close at 4 p.m.
Here’s what else is happening today:
In Commodities, Fixed Income and Cryptocurrencies:
- West Texas Intermediate crude oil fell 3.05% to $82.76 per barrel. Brent crude oil, the international benchmark, fell 2.9% to $87.41 per barrel.
- Gold fell 0.55% to $2,369 per ounce.
- The yield on the 10-year Treasury note fell 7 basis points to 4.583%.
- Bitcoin fell 3.06% to $61,063.
