Wall Street sells off after Powell speech on rate hikes to combat rampant U.S. inflation
The shares were sold sharply on Friday after Federal Reserve Chairman Jerome Powell said in his Jackson Hole speech that the central bank will not become accommodative in its fight against rampant U.S. inflation reaching Carteres’ highs of 40. years.
Sara Min for CNBC:
The Dow Jones Industrial Average fell 611 points, or 1.85%, after the initial swing during the Fed chairman’s comments. The S&P 500 fell 2.18% and the Nasdaq Composite slipped 2. 71%.
These moves follow a hawkish speech by the Fed chairman who reiterated a tough stance against inflation, prompting investors to weigh the implications of higher interest rates longer.
“Restoring price stability will likely require maintaining a restrictive political stance for some time. The historic record strongly warns against premature easing of politics, “Powell said.
The major averages were in step for their second week of declining. The Dow is on track for a 2.9% decline. The S&P 500 and Nasdaq Composite are heading towards losses of around 2.8% and 3.2% respectively.
The group’s tech giants led the decline, with Alphabet shares down nearly 4%. Meta lost 2.5% and Netflix lost 2%. Twitter lost 1.5%. [Apple shed 2.08%.]
The names of the technology are particularly sensitive to rising interest rates, which damage the value of future equity earnings.
MacDailyNews takes: In January, Interactive Brokers founder Thomas Peterffy said: “Inflation is 7% – 1% or 2%. [in interest rate hikes] it does not mean anything. If they really wanted to stop inflation, they would have to raise rates to 4%, 5%, 6%. “
It’s best to control inflation, if you know how, while you can. – MacDailyNews, May 11, 2021
Stopping the misleading crusade against domestic energy production and profligate federal spending and inflation will stop suddenly. It is not difficult. – MacDailyNews, May 11, 2022
For the younger generation, sometimes difficult lessons have to be repeated and learned the hard way. As we go, remember: it is always darker before dawn. – MacDailyNews, July 14, 2022
Inflation is repudiation. —Calvin Coolidge
When a company or individual spends more than they earn, they go bankrupt. When the government does it, it sends you the bill … [which] it comes in two ways: higher taxes and inflation. Make no mistake, inflation is a tax and not by chance. – Ronald Reagan
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