Highlights
Equities continued lower Thursday on risk aversion linked to recession worries and hawkish Federal Reserve comments. The market has been subject to profit-taking pressure and sentiment that equities rallied too much to start 2023 given the macro backdrop.
The Dow Jones industrial average and the S&P 500 both slipped 0.8 percent and the NASDAQ lost 1.0 percent to add to Wednesday's nasty selloff after weak economic reports. US Treasury yields and oil prices rose while the dollar was mixed.
In Thursday's action, equities responded to rising bond yields after another unexpected drop in US jobless claims, and to comments from Fed Vice Chair Lael Brainard and Boston Fed President Susan Collins. Both saw more rate increases ahead, though both noted risks of overdoing tightening. Risk assets also reacted badly to JP Morgan CEO Jamie Dimon's comment that inflation won't dissipate quickly.
Another Fed official, FOMC voter Lorie Logan, late on Wednesday said she would favor a further slowing of rate hikes at the policy meeting on Feb.1, but said that doesn't necessarily mean the federal funds rate will stop rising once it reaches the 5.0 to 5.25 percent range. She suggested the Fed might need to go higher and cautioned against doing too little. If financial conditions ease too much in response to a slower pace of rate hikes, Logan said, the FOMC might have to raise rates more than expected.
In Thursday's trading, sectors were mixed, with materials, consumer discretionary, financials, information technology, and industrials lagging. Holding up relatively well were health care, communications services, and energy.
The Dow Jones industrial average and the S&P 500 both slipped 0.8 percent and the NASDAQ lost 1.0 percent to add to Wednesday's nasty selloff after weak economic reports. US Treasury yields and oil prices rose while the dollar was mixed.
In Thursday's action, equities responded to rising bond yields after another unexpected drop in US jobless claims, and to comments from Fed Vice Chair Lael Brainard and Boston Fed President Susan Collins. Both saw more rate increases ahead, though both noted risks of overdoing tightening. Risk assets also reacted badly to JP Morgan CEO Jamie Dimon's comment that inflation won't dissipate quickly.
Another Fed official, FOMC voter Lorie Logan, late on Wednesday said she would favor a further slowing of rate hikes at the policy meeting on Feb.1, but said that doesn't necessarily mean the federal funds rate will stop rising once it reaches the 5.0 to 5.25 percent range. She suggested the Fed might need to go higher and cautioned against doing too little. If financial conditions ease too much in response to a slower pace of rate hikes, Logan said, the FOMC might have to raise rates more than expected.
In Thursday's trading, sectors were mixed, with materials, consumer discretionary, financials, information technology, and industrials lagging. Holding up relatively well were health care, communications services, and energy.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
