After an initial jolt, stocks gave up gains on Friday morning after Federal Reserve Chairman Jerome Powell said the central bank was “prepared to raise interest rates further,” during his widely expected remarks at the annual Jackson Hole Economic Symposium in Wyoming.
Wall Street initially reacted by riding higher, with the Nasdaq Composite up as much as 1%. But investors seem to take a darker interpretation as they absorb the rhetoric.
The S&P 500 (^GSPC) fell 0.3%, while the Dow Jones Industrial Average (^DJI) lost 0.1%. The Nasdaq Composite Index (^IXIC) fell 0.4%, putting major averages for another loss after Powell delivered a dovish message reiterating the Fed’s fight to bring inflation back to its 2% target.
The negative turn on Wall Street follows Thursday’s slump when stocks closed lower across the board as the Nasdaq fell nearly 2%, giving up gains from an early rally spurred by a strong Nvidia (NVDA) earnings report.
Powell’s comments reinforced earlier comments by Boston Fed President Susan Collins — who spoke to Yahoo Finance’s Jennifer Schonberger in an interview from Jackson Hole — suggesting higher interest rates may be needed to tame inflation.
Last year, stocks sold off sharply during Powell’s speech in Jackson Hole, in which he said the Fed will continue to raise interest rates “until the job is done” to bring down inflation. Since that speech, rates have risen by an additional 300 basis points, with the federal funds rate now at its highest level since 2001.
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