US stocks fall despite Powell's comments - markets lose confidence
News - Wall Street Reputation, February 7
US stock market futures opened lower on Monday morning. U.S. government bond yields rose as investors watched a busy corporate earnings week and Federal Reserve Chair Jerome Powell's latest interest rate comments.
As of 09:38 ET (20:38 GMT), the leading index, the S&P 500, was down 13 points, or 0.3%, the technology-focused Nasdaq index was down 25 points, or 0.2%, and the blue-chip Dow Jones Industrial Average was down 13 points, or 0.3%. The index fell 123 points, or 0.3%.
Last week, the three leading averages rose for the 14th of 13 weeks, boosted by a strong jobs report and strong quarterly results from several tech giants, including Microsoft (MSFT) and Facebook affiliate Meta Platforms (META). In particular, Meta's stock price soared 20.3%, raising the social media company's market capitalization to $1.2 trillion.
As we head into a new trading week, traders are evaluating Federal Reserve Chairman Jerome Powell's comments in an interview with CBS' "60 Minutes" that aired Sunday. Powell said a strong U.S. economy would give Federal Reserve managers room to take a cautious approach to cutting wage rates next year.
Powell added that "we want to see in the data" whether prices are cooling back to the central bank's stated 2% level in a sustainable way. His remarks subtly signal the caution among policymakers to avoid a recurrence of inflation by lowering interest rates too quickly. Last week, the feds kept interest rates in their target range of 5.25% to 5.50%, emphasizing that they would need to wait until they saw more evidence of easing inflation before cutting rates.
But Powell still spoke about the need to be careful not to let rates rise too long and crowd out broader activity. “There is a risk that we are moving too fast,” he said.
CME Group's Mindful Feed Watch tool shows that there is only about a 16% chance that the feds will lower the 25 basis points at the next policy meeting in March. At the beginning of the last month, when the policy was said to be more fugitive, this probability was about 64%.
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