(Bloomberg) — Stocks pared losses as Federal Reserve Chair Jerome Powell’s remarks did little to alter bets on another 75-basis-point rate hike during this month’s central bank gathering.
(Bloomberg) — Stocks pared losses as Federal Reserve Chair Jerome Powell’s remarks did little to alter bets on another 75-basis-point rate hike during this month’s central bank gathering.
The S&P 500 trimmed a slide that approached 1% in the first few minutes of trading after the opening bell. Treasury two-year yields, which are more sensitive to imminent policy decisions, rose alongside the dollar. The 10-year rate retreated.
Powell said the US central bank will not flinch in its efforts to curb inflation “until the job is done.” “We need to act now, forthrightly, strongly as we have been doing,” he noted Thursday in remarks at the Cato Institute’s monetary policy conference in Washington. “It is very important that inflation expectations remain anchored,” Powell said, adding that “what we hope to achieve is a period of growth below trend,” which will cause the labor market to get back into better balance.
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Applications for US unemployment insurance fell for a fourth straight week to the lowest since May, suggesting demand for workers remains healthy despite an uncertain economic outlook. Powell said in a speech last month that the labor market is “clearly out of balance,” as demand for workers far exceeds supply.
Europe’s bonds slid after policy makers delivered an unprecedented interest-rate increase to tackle searing inflation, with the European Central Bank pledging “several” further increases, even as the outlook for economic growth darkens.
US stocks could slide a further 25% if the economy tips into recession, with risks to a sustained equity rally mounting, according to Deutsche Bank AG strategists. With company profits set to drop, valuations still high and recession risks looming, the fundamental picture is challenging, strategists led by Binky Chadha wrote in a note dated Sept. 7. His base-case scenario still sees shares rising by year-end.
Among corporate highlights, GameStop Corp. jumped after the video game retailer announced a partnership with cryptocurrency exchange FTX US. Amylyx Pharmaceuticals Inc. surged as its controversial treatment for amyotrophic lateral sclerosis won the support of a panel of US regulatory advisers. Tesla Inc.’s China operations are back in full swing after an upgrade to its factory in Shanghai and a Covid-19 lockdown in the city slowed production earlier this year.
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Some of the main moves in markets:
Stocks
- The S&P 500 fell 0.2% as of 9:58 a.m. New York time
- The Nasdaq 100 fell 0.2%
- The Dow Jones Industrial Average fell 0.3%
- The Stoxx Europe 600 fell 0.2%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.4% to $0.9969
- The British pound fell 0.3% to $1.1494
- The Japanese yen fell 0.1% to 143.92 per dollar
Bonds
- The yield on 10-year Treasuries declined one basis point to 3.25%
- Germany’s 10-year yield advanced seven basis points to 1.65%
- Britain’s 10-year yield advanced eight basis points to 3.12%
Commodities
- West Texas Intermediate crude rose 2.2% to $83.77 a barrel
- Gold futures fell 0.3% to $1,722.50 an ounce
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