S&P 500 Slumps as Powell Pushes Back Against Fed Pause

By Yasin Ebrahim

Investing.com -- The S&P 500 tumbled Wednesday after swinging between gains and losses as Federal Reserve chairman Jerome Powell said it was "very premature" to bet on Fed pause after the central bank lifted rates for a fourth time in a row.  

The S&P 500 fell 2%, the Dow Jones Industrial Average fell 1.2% or 389 points, the Nasdaq was down 2.83%.

The Fed raised its benchmark rate by 0.75%, and suggested that future hikes will face a higher threshold, but Fed chairman Jerome Powell pushed back against the idea of a Fed pause.

“[I]t is very premature to be thinking about pausing,” Powell said in a press conference on Wednesday. The chief also hinted that the Fed isn't as close as to end of its tightening cycle as many had expected, saying that the "ultimate level of interest rates will be higher than previously expected [in September]."

The somewhat hawkish remarks from Powell cooled the earlier optimism following the release of the monetary policy, which has “changed significantly,” from the prior statement, Stifel said in a note, adding that it was a “clear signal that wave of 75bp hikes is over.”

Treasury yields turned positive, putting pressure on rate-sensitive sectors including tech.

Apple Inc (NASDAQ:AAPL), Alphabet Inc (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), and Amazon.com (NASDAQ:AMZN) fell more than 2%.

Semiconductor stocks were also pushed lower as Advanced Micro Devices (NASDAQ:AMD) gave up gains following quarterly results and guidance that missed analysts’ expectations.

Airbnb Inc (NASDAQ:ABNB), meanwhile, fell more than 10% as fourth-quarter guidance that fell just short of estimates overshadowed quarterly results that beat on the bottom line. 

CVS Health (NYSE:CVS), meanwhile, raised its full-year guidance after reporting better-than-expected revenue and profit in the third quarter of the year. It rose more than 2%.

Energy fell more than 3%, meanwhile, even as oil prices climbed following an unexpectedly draw in U.S. weekly crude stockpiles. 

Marathon Oil Corporation (NYSE:MRO), Phillips 66 (NYSE:PSX), and the Devon Energy Corporation (NYSE:DVN), were among the biggest decliners with the latter down more than 12%.