Wall Street ends in a hole after Powell’s speech in Wyoming

Aug 26 (Reuters) – Wall Street ended Friday all three indexes down more than 3 percent, canceling out Federal Reserve Chairman Jerome Powell’s signal that the central bank will continue raising interest rates to tame inflation emerging hopes of a more modest path among some investors. .

The Nasdaq led the declines among the three US benchmarks, posting its worst daily performance since June 16, dragged down by high-growth technology stocks that pulled back after rallying the previous day in anticipation of Powell’s scheduled speech at the Jackson Hole Central Banking Conference in Wyoming.

Powell said at the event that the US economy will need tight monetary policy “for some time” before inflation is under control. This, he added, means slower growth, a weaker job market and “some pain” for families and businesses. Read more

Investors knew more rate hikes were coming, and were split between whether the Fed would raise 75 basis points and 50 basis points next month.

However, recent data highlighting continued strength in the labor market, offsetting two consecutive quarters of negative economic growth, has led some to expect a more moderate pace of increases to be imminent.

“The decline comes from the idea that it’s not about the pace going forward and how they tighten financial conditions, it’s about how long we stay in this restrictive political position,” said Garrett Melson, portfolio strategist at Natixis Investment Managers.

“That’s the nuance they’re trying to push forward, and Powell was probably more clear that day. But if you’ve listened to other Fed speakers in the past two weeks, it’s the same message.”

As investors change positions after absorbing the rhetoric, Cboe’s volatility index (.VIX) It jumped 3.78 points to 25.56 points, its highest close in six weeks.

All 11 major sectors of the S&P 500 were lower, led by declines ranging between 3.9% and 4.3% in information technology. (.SPLRCT)Telecommunications Services (.SPLRCL) and consumer appreciation (.SPLRCD) indexes.

S&P 500 . Index (.SPX) It lost 141.46 points, or 3.37%, to close at 4057.66 points, while the Nasdaq Composite. (nineteenth) It lost 497.56 points, or 3.94%, to 12,141.71 points. Dow Jones Industrial Average (.DJI) It fell 1008.38 points, or 3.03%, to 32283.40 points.

High-growth and technology stocks fell. nvidia company (NVDA.O) Amazon.com shares fell 9.2 percent and 4.8 percent, respectively, after being the top gainers in the previous session. Meanwhile, Alphabet Inc (GOOGL.O)and Meta Platforms Inc and Block Inc (SQ.N) It also fell between 4.1% and 7.7%.

US stock indices have fallen since the beginning of the year as investors anticipate higher interest rates and a slowing economy.

But they have rebounded strongly since June, with the S&P 500 recouping nearly half of its losses for the year on stronger-than-expected quarterly earnings and hopes that decades-high inflation will peak.

Friday’s declines, however, wiped out the modest August gains all three benchmarks had previously cut, sending the trio into a second straight week of declines.

Over the course of the week, the Nasdaq is down 4.4%, the Dow Jones is down 4.2%, and the S&P is down 4%.

Data earlier showed consumer spending barely rose in July, but inflation eased significantly, which could give the Federal Reserve room to pare steep rate increases. Read more

Dell Technologies Inc (DELL.N) It fell 13.5% as it joined rivals in anticipating a slowdown as inflation and a bleak economic outlook prompted consumers and businesses to tighten their financial constraints. Read more

Affirm Holdings Inc (AFRM.O) It fell 21.3% after the buy-now-pay-later lender forecast full-year revenue below Wall Street estimates, underscoring a broader downturn in the fortunes of the once-swiping fintech sector.

Volume on US exchanges was 10.37 billion shares, compared to an average of 10.64 billion for the full session over the last 20 trading days.

Additional reporting by Bansari Mayor Kamdar, Devik Jain, Anisha Sircar and Sruthi Shankar in Bengaluru and David French in New York; Editing by Magu Samuel, Aditya Soni and Grant McCall

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