U.S. Stocks Push Lower After Powell’s Hawkish Signals: Markets Wrap

(Bloomberg) -- Stocks fell as Jerome Powell said that the Federal Reserve still has “some ways to go” to knock down inflation, adding that it’s very premature to think about pausing hikes as rates could peak at higher levels than previously thought.

The S&P 500 retreated after initially rallying when the Fed chief said that a slower pace of rate hikes could come as soon as December. Tech shares underperformed. Two-year US yields -- which are more sensitive to imminent Fed moves -- fluctuated.

“This is not an environment in which the Fed will pivot or signal a pivot,” said Ronald Temple, head of US equity at Lazard Asset Management. “To do so would be malpractice, and the Fed knows that. In December, the Fed will have two more inflation reports and two more jobs reports. Then, perhaps, the FOMC can signal a deceleration in tightening, but not before.”

The Federal Open Market Committee’s unanimous decision lifted the target for the benchmark federal funds rate by another 75 basis points to a range of 3.75% to 4%, its highest level since 2008.

Data Wednesday showed hiring at US companies rose in October by more than forecast, underscoring resilient labor demand despite the Fed’s efforts to cool the economy. A strong job market has fueled fast wage growth, contributing to rapid inflation and putting pressure on the Fed to aggressively tighten monetary policy.

The Treasury halted the longest string of cutbacks to its quarterly sales of longer-term debt in about eight years, showcasing the end of a period of historic reduction in the fiscal deficit.

In corporate news, Boeing Co.’s chief said the planemaker could generate $10 billion in cash annually by mid-decade, once it turns around its operations after years of setbacks and miscues. China has ordered a seven-day lockdown of the area around Foxconn Technology Group’s main plant in Zhengzhou, a move that will severely curtail shipments in and out of the world’s largest iPhone factory.

Key events this week:

• Bank of England rate decision, Thursday
• US factory orders, durable goods, trade, initial jobless claims, ISM services index, Thursday
• ECB President Christine Lagarde speaks, Thursday
• US nonfarm payrolls, unemployment, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.7% as of 3:11 p.m. New York time
• The Nasdaq 100 fell 1.1%
• The Dow Jones Industrial Average was little changed
• The MSCI World index fell 0.4%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.1% to $0.9890
• The British pound was little changed at $1.1473
• The Japanese yen rose 0.8% to 147.07 per dollar

Cryptocurrencies

• Bitcoin rose 0.3% to $20,544.29
• Ether was little changed at $1,576.3

Bonds

• The yield on 10-year Treasuries was little changed at 4.05%
• Germany’s 10-year yield advanced one basis point to 2.14%
• Britain’s 10-year yield declined seven basis points to 3.40%

Commodities

• West Texas Intermediate crude rose 1.6% to $89.75 a barrel
• Gold futures rose 0.1% to $1,651.80 an ounce

--With assistance from and .

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