NEW YORK, Feb 9 – Wall Street’s major averages pulled back on Wednesday as investors assessed the Federal Reserve’s policy path, reported Xinhua.
The Dow Jones Industrial Average fell 207.68 points, or 0.61 per cent, to 33,949.01. The S&P 500 sank 46.14 points, or 1.11 per cent, to 4,117.86. The Nasdaq Composite Index shed 203.27 points, or 1.68 per cent, to 11,910.52.
All the 11 primary S&P 500 sectors ended in red, with communication services and utilities down 4.13 percent and 1.71 per cent, respectively, leading the slide.
The market weakness came after investors digested the latest comments from top Fed officials.
New York Fed President John Williams said Wednesday that the Fed’s forecast of a peak short-term rate of 5 per cent to 5.25 per cent was reasonable, adding the central bank needs to maintain “restrictive” interest rates for a few years to quell inflation.
Fed Governor Christopher Waller warned that the Fed’s inflation fight is not over and could result in higher interest rates than markets are anticipating.
Markets have long held a more dovish interest rate outlook than top Fed officials. But this has changed in recent days, with the markets now expecting a more hawkish rate trajectory, especially after Friday’s robust jobs data, which showed the unemployment rate falling to a new low of 3.4 per cent in January.
Fed Chair Jerome Powell said on Tuesday that the payroll data underlined his view that Fed officials have a “significant road ahead” to cool inflation.
“Recent developments underline our view that an inflection point in rates, growth, and market sentiment has not yet been reached,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said Wednesday in a note.
“We continue to see headwinds for the broad US market in the near term,” he said, adding “the lagged effect of prior rate hikes will continue to slow earnings.”
