On Friday, stocks dropped significantly after Federal Reserve Chair Jerome Powell made it clear in a speech at Jackson Hole that the Fed would not let up on its efforts to slow inflation.
In the closing hour of trade, the Dow Industrial Average plummeted 843 points or 2.55%. The Nasdaq Composite lost 3.31 percent, and the S&P 500 dropped 2.83 percent.
Since Powel has taken a hard line on inflation, investors have debated the effects of sustained interest rate hikes.
Maintaining a restrictive policy posture for some period may be necessary to restore price stability.
However, Powell said the past should serve as a strong warning against too soon relaxing policy.
Zach Hill, Horizon Investments’ head of portfolio management, stated, “We do trust the Fed.”
We’ve seen a repricing of the reduction scheduled for 2023, and we trust what they’re saying that rates will be higher for longer.
So we anticipate more developments there, which should keep the equities market volatile.
It seemed like the main averages would fall for a second week.
The Dow is expected to fall by 2.9% today. Losses of around 2.8% and 3.2% are expected for the S&P and Nasdaq Composite.