Stocks fell on Wednesday to give back some gains after rising a day earlier, as investors contemplated the potential for the Federal Reserve to take an even more aggressive approach to rein in inflation.
The S&P 500 declined after the index gained more than 1% on Tuesday. The Dow and Nasdaq also opened lower. Crude oil prices edged higher and West Texas Intermediate rose nearly 4% to close at $114 a barrel.
US stocks have seen gains and losses this week as investors weighed in on Fed Chair Jerome Powell’s snarky comments earlier this week. Speaking at the National Association for Business Economics conference on Monday, Powell said the central bank would “take necessary steps to ensure a return to price stability,” and would be ready to raise the benchmark interest rate by more than 25 basis points. The next meeting, if considered necessary, to check the rapidly rising prices.
These comments – which came less than a week after Powell’s last public remarks at the end of the Fed’s final policy-making meeting last Wednesday – were taken as a surprisingly quick turnaround in addressing inflation. Highlights the key policy makers seen in doing
“Going into my faith, first [Monday] It was what the Federal Reserve really believed in their hearts that inflation is transitory in nature, and we’ll see it come down over the summer,” Jeff Klingelhofer, co-head of investments at Thornburg Investment Management, said Tuesday. told Yahoo Finance Live. “What we saw from Jerome Powell” [Monday] It’s that his confidence has wavered.”
“If we have another high inflation print, I think the market will have to start pricing in the possibility of a 50 basis point rate hike, even the possibility of an inter-meeting hike, and a Fed that will Really scared of inflation being out of control,” he said.
The Fed last week raised interest rates for the first time since 2018, bringing the benchmark rate up 25 basis points from near-zero levels. The Federal Open Market Committee (FOMC) also telegraphed last Wednesday that its middle member expects six quarter-point rate hikes this year.
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Adding to this, the shares traded with high volatility during 2022, as investors priced the possibility that higher interest rates and otherwise tight financial conditions would weigh on equity valuations. Uncertainty about the progress of Russia’s invasion of Ukraine also remains a matter of concern. Still, some strategists noted that investors don’t have to worry, at least in the near term, when it comes to the impact of the start of the Fed hiking cycle.
Deutsche Bank strategists, including Jim Reid, head of credit strategy and thematic research, wrote in a note: “Equities continue their upward march in the nine months following the Fed’s tightening, as the strong economy that has supported growth ” “After that, equities become more volatile and more likely to experience a decline. Ten-year Treasury yields begin to rise, driving their prices down, but eventually flatten and decline. Because the prospects of the next downturn in the market increase. History shows that we should not be worried about the effects of the near future.”
Elsewhere, investors continued to monitor developments in Russia’s war in Ukraine and the global response. President Joe Biden is set to travel to Brussels on Wednesday before convening a summit of all NATO allies, in a meeting that will set the stage for the announcement of more sanctions against Russia and more humanitarian aid for Ukraine.
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4:07 a.m. ET: Stocks end low: Dow drops 449 points, or 1.3%, Nasdaq drops 1.3%
Here were the main moves in the markets as of 4:07 a.m. ET:
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S&P 500 (^GSPC,: -55.37 (-1.23%) to 4,456.24
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dow (^ DJI,: -448.96 (-1.29%) to 34,358.50
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Nasdaq (^ IXIC,: -186.21 (-1.32%) to 13,922.60
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Raw (CL = F,: +$5.14 (+4.70%) to $114.41 per barrel
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Sleep (gc = f,: +$25.90 (+1.35%) to $1,947.40 per ounce
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10 year treasury (^tnx,: -5.2 bps yield 2.3210%
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2:40 a.m. ET: Madeleine Albright, the first female secretary of state, 84. died in
Madeleine Albright, who served as the first female secretary of state from 1997 to 2001 under former President Bill Clinton, died Wednesday at the age of 84.
Albright’s family confirmed his death in a statement. Prior to his tenure as Secretary of State, he served as Clinton’s U.S. ambassador to the United Nations from 1993 to 1997. He was awarded the Medal of Freedom in 2012 by former President Barack Obama.
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11:47 am ET: Here are the best-performing stocks in the S&P 500 after two years from pandemic-era bottoms
Wednesday marks the two-year anniversary since the S&P 500 hit its pandemic-era low, closing at 2,237.4 on March 23, 2020.
Since that date, the index has risen just over 101%. And some components contributed more to that benefit than others.
Tesla (TSLA) was the best-performing stock in the past two years, climbing over 1040% since March 23, 2020. Margins came in with a jump of 881%, followed by Devon Energy (DVN). Free-Port McMoran, Caesars Entertainment (CZR) and Marathon Oil (MRO) rounded out the top five.
At the same time, many other stocks have also underperformed. Viatris (VTRS) has been the biggest laggard in the two-year period, falling 31%. Biogen (BIIB) is down 22%. And Clorox (CLX) – once one of the best-performing stocks during the pandemic – has fallen 20%.
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10:09AM ET: New home sales unexpectedly drop in February
US new home sales fell unexpectedly for a month after February, underscoring some slower housing activity and demand as rates rose higher and affordability further squeezed.
The Commerce Department said Wednesday that new home sales declined 2.0% in February compared to January. Economists expected a consensus of 1.1 percent, according to data from Bloomberg. And in January, the downside was revised downward to show an 8.4% drop in new home sales — far more than the 4.5% drop previously reported.
With the latest decrease, new home sales were up at a seasonally adjusted annual rate of 772,000. This represents the lowest level since November 2021.
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9:30 a.m. ET: Stocks open lower
Here’s a look right after the market opening bell:
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S&P 500 (^GSPC,: -24.67 (-0.55%) to 4,486.94
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dow (^ DJI,: -169.02 (-0.49%) to 34,613.89
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Nasdaq (^ IXIC,: -110.42 (-0.78%) to 13,998.90
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Raw (CL = F,: +$113.45 (+3.83%) to $113.45 per barrel
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Sleep (gc = f,: +$9.60 (+0.5%) to $1,931.10 per ounce
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10 year treasury (^tnx,:-2.4 bps to yield 2.353%
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8:10AM ET: Mortgage applications drop by most in a month as rates rise further
US mortgage application volumes dropped for back-to-back weeks and recorded the biggest decline in a month amid the Federal Reserve’s first interest rate hike since 2018 and rising expectations for higher rates.
The Mortgage Bankers Association (MBA) said on Wednesday that an index tracking weekly mortgage applications dropped 8.1% during the week ended March 18. This came after a 1.2% drop during the previous week. Refinancing declined by 14% compared to the previous week and by 54% compared to the same period last year. Buying was down 1% on a seasonally unreasonable basis week-over-week, and fell 12% over the prior year.
“Rates on 30-year analog mortgages increased 23 basis points last week, the biggest weekly increase since March 2020. Rates jump as the market has moved into prices in anticipation of lower MBS along with the faster pace of rate hikes. [mortgage-backed securities] purchases from the Federal Reserve,” Mike Fratantoni, MBA senior vice president and chief economist, said in a press statement.
He said, “With mortgage rates now at 4.5%, compared to rates of 3% or less not too long ago, it is no surprise that refinancing volumes have fallen by more than 50% compared to last year, ” They said. “The MBA’s new March forecast expects mortgage rates to continue to rise through 2022.”
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7:31 am ET Wednesday: Stock futures fall to give back some of Tuesday’s gains
Here’s what was happening in the markets on Wednesday morning:
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S&P 500 Futures (ES = F,: -19 points (-0.42%) to 4,486.00
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Dow Futures (ym = f,: -119 marks (-0.34%) to 34,590.00
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Nasdaq Futures (NQ = F, -97.75 marks (-0.67%) to 14,556.25
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Raw (CL = F,: +$2.40 (+2.20%) to $111.67 per barrel
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Sleep (gc = f,: +$9.60 (+0.50%) to $1,931.10 per ounce
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10 year treasury (^tnx,: unchanged, yield 2.377%
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6:10 a.m. ET Tuesday: Stock futures open lower
Here’s where the major stock index futures opened on Tuesday evening:
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S&P 500 Futures (ES = F,: -2.25 marks (-0.05%) to 4,402.75
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Dow futures (ym = f,: -10 marks (-0.03%) to 34,699.00
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Nasdaq Futures (NQ = F, -12 points (-0.08%) to 14,642.00
NEW YORK, NEW YORK – MARCH 16: Traders work on the floor of the New York Stock Exchange (NYSE) on March 16, 2022 in New York City. The Dow started the day in positive territory, extending yesterday’s rally. (Photo by Spencer Platt/Getty Images)
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Emily McCormick is a reporter for Yahoo Finance. follow him on twitter
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