Highlights
Stocks tanked Tuesday Monday after Federal Reserve Chair Jerome Powell appeared to signal a more aggressive Fed anti-inflation stance. The Dow Jones industrial average lost 1.7 percent, the S&P 500 fell 1.5 percent and the NASDAQ was off by 1.3 percent. US Treasury yields rose while oil prices and the dollar slipped.
US Treasury yields surged again, led by shorter maturities, with the 2-year note yield breaking above 5 percent for the first time since 2007. The Treasury yield curve inversion deepened in a sign that hopes for a soft landing are fading.
The rise in yields came after Powell said strong economic data were likely to force the Fed to raise rates faster and more than previously expected. Markets immediately priced in an expectation the Fed will raise rates by 50 basis points this month, rather than the 25 basis points previously anticipated, and the terminal rate would exceed the 5 to 5 1/2 percent rate most Fed officials previously penciled in.
The comments spurred a broad risk-off move with most sectors off about 1 percent. Losses were initially led by highly-liquid megacaps but growth and value stocks suffered equally as the day progressed. Hardest hit sectors included energy, materials, financials, real estate, health care, and utilities.
US Treasury yields surged again, led by shorter maturities, with the 2-year note yield breaking above 5 percent for the first time since 2007. The Treasury yield curve inversion deepened in a sign that hopes for a soft landing are fading.
The rise in yields came after Powell said strong economic data were likely to force the Fed to raise rates faster and more than previously expected. Markets immediately priced in an expectation the Fed will raise rates by 50 basis points this month, rather than the 25 basis points previously anticipated, and the terminal rate would exceed the 5 to 5 1/2 percent rate most Fed officials previously penciled in.
The comments spurred a broad risk-off move with most sectors off about 1 percent. Losses were initially led by highly-liquid megacaps but growth and value stocks suffered equally as the day progressed. Hardest hit sectors included energy, materials, financials, real estate, health care, and utilities.
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.
