Stock market today: Dow slumps as Powell's testimony puts 50bps in play for March

By Yasin Ebrahim

Investing.com -- The Dow slumped Tuesday, as hawkish remarks from Federal Reserve chair Jerome Powell ramped up bets on the Fed returning to an aggressive rate-hike path at its meeting later this month.

The Dow Jones Industrial Average fell 1.7%, or 574 points, the S&P 500 fell 1.5%, and the Nasdaq Composite was down 1.3%.

The odds of a 50 basis point rate hike at the Fed's March 21-22 meeting jumped to nearly 70% from 24% a day earlier after Powell said the “ultimate level of interest rates is likely to be higher than previously anticipated,” after the “latest economic data have come in stronger than expected.”

The Fed chairman also said that “if the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”

The hawkish remarks pushed Treasury yields higher, with the 2-year yield topping 5% for the first time since 2007.

Financials were the worst performing sector, with banks leading the decline amid a deeper inversion in the Treasury yield curve – usually a headwind for banks that borrow short-term rates and loan out long-term.

Zions Bancorporation (NASDAQ:ZION), Citizens Financial Group Inc (NYSE:CFG), and Fifth Third Bancorp (NASDAQ:FITB) were among the biggest decliners falling about 5% on the day.

Technology was also under pressure from surging rates, with Apple (NASDAQ:AAPL), Alphabet Inc (NASDAQ:GOOGL), and Microsoft Corporation (NASDAQ:MSFT) down more than 1%.

Meta Platforms (NASDAQ:META), however, fell only 0.2% as investors continued to cheer further signs that the social media company is determined to make progress toward profitability amid reports that it plans to cut more jobs as soon as this week after recently laying off about 13% of its workforce.

Energy, meanwhile, also dragged the market lower as oil prices suffered the biggest selloff in the two months under pressure from a strong dollar.

Devon Energy Corporation (NYSE:DVN), APA Corporation (NASDAQ:APA), Hess Corporation (NYSE:HES) ended the day in the red, with the latter down more than 3%.

On the earnings front, Dick’s Sporting Goods (NYSE:DKS) reported fourth-quarter results that topped Wall Street estimates, sending its shares more than 11% higher.

In other news, United Airlines Holdings (NASDAQ:UAL) bucked the broader market trend lower to end the day up 3% as its rival JetBlue Airways Corp (NASDAQ:JBLU) is embroiled in a legal battle to complete its acquisition of Spirit Airlines (NYSE:SAVE).

The Justice Department filed a suit to block JetBlue’s $3.6 billion takeover of Spirit, citing competition concerns.