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U.S. stock markets closed sharply lower on Wednesday following the Fed’s FOMC meeting that hiked interest rate by 75 basis points for fourth consecutive meetings. Moreover, Fed Chairman’s ultra-hawkish statement dented market participants’ confidence. All the three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) tumbled 1.6% or 505.44 points to close at 32,147.76. Notably, 19 components of the 30-stock index ended in negative territory while 11 in green. The major loser of the Dow was Salesforce Inc. (CRM - Free Report) , shares of which plummeted 6.1%. Salesforce currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The tech-heavy Nasdaq Composite finished at 10,524.80, plunging 3.4% or 366.05 points due to weak performance of large-cap technology stocks. The S&P 500 slid 2.5% to end at 3,559.69. All 11 broad sectors of the benchmark index closed in negative territory. The Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) fell 3.8% and 3.5%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 0.2% to 25.86. A total of 12.80 billion shares were traded on Wednesday, higher than the last 20-session average of 11.57 billion. Decliners outnumbered advancers on the NYSE by a 3.38-to-1 ratio. On Nasdaq, a 2.81-to-1 ratio favored declining issues.
Fed’s November FOMC Meeting
Fed has raised the benchmark interest rate by 75 basis points to the range of 3.75-4%. This was the fourth consecutive FOMC meeting where the Fed raised the lending rate by 75 basis points. The current range is the highest since January 2008 and marked the most aggressive pace of monetary policy tightening since the early 1980s.
In its new policy statement, the central bank said that it “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
Initially, investors were excited with this statement as several economists, financial experts and other market participants viewed that November FOMC was the last one to have 75 basis points rate hikes. All the three major stock indexes rallied briefly as the Dow was up by more than 300 points.
However, the market took a sharp downturn after the press conference of the Fed Chairman Jerome Powell. The Fed Chair denied chance of slowing down rate hike anytime soon although the committee may discuss about this fact in next couple of FOMC meetings. Powell said that the “terminal rate” may be higher than what was expected in September FOMC meeting.
Per Powell, “We still have some ways to go and incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected.” At the same time, regarding the slowing down of monetary tightening, he said, “So that time is coming, and it may come as soon as the next meeting or the one after that. No decision has been made.”
Market participants are worried that the Fed will not be able to contain inflation with a soft landing of the economy. The fed Chair also agreed with this scenario. “Policy needs to be more restrictive, and that narrows the path to a soft landing,” Powell said. Investors remained concerned about a recession in early 2023.
Economic Data
Automatic Data Processing Inc. (ADP - Free Report) said in its National Employment report that private employment increased by 239,000 in October, beating the consensus estimate of around 200,000. September’s payroll was revised downward to 192,000 from 208,000 reported earlier. In October, services sector added 247,000 jobs while the goods producing sector shed 8,000 jobs.
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Stock Market News for Nov 3, 2022
U.S. stock markets closed sharply lower on Wednesday following the Fed’s FOMC meeting that hiked interest rate by 75 basis points for fourth consecutive meetings. Moreover, Fed Chairman’s ultra-hawkish statement dented market participants’ confidence. All the three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) tumbled 1.6% or 505.44 points to close at 32,147.76. Notably, 19 components of the 30-stock index ended in negative territory while 11 in green. The major loser of the Dow was Salesforce Inc. (CRM - Free Report) , shares of which plummeted 6.1%. Salesforce currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The tech-heavy Nasdaq Composite finished at 10,524.80, plunging 3.4% or 366.05 points due to weak performance of large-cap technology stocks. The S&P 500 slid 2.5% to end at 3,559.69. All 11 broad sectors of the benchmark index closed in negative territory. The Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) fell 3.8% and 3.5%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 0.2% to 25.86. A total of 12.80 billion shares were traded on Wednesday, higher than the last 20-session average of 11.57 billion. Decliners outnumbered advancers on the NYSE by a 3.38-to-1 ratio. On Nasdaq, a 2.81-to-1 ratio favored declining issues.
Fed’s November FOMC Meeting
Fed has raised the benchmark interest rate by 75 basis points to the range of 3.75-4%. This was the fourth consecutive FOMC meeting where the Fed raised the lending rate by 75 basis points. The current range is the highest since January 2008 and marked the most aggressive pace of monetary policy tightening since the early 1980s.
In its new policy statement, the central bank said that it “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
Initially, investors were excited with this statement as several economists, financial experts and other market participants viewed that November FOMC was the last one to have 75 basis points rate hikes. All the three major stock indexes rallied briefly as the Dow was up by more than 300 points.
However, the market took a sharp downturn after the press conference of the Fed Chairman Jerome Powell. The Fed Chair denied chance of slowing down rate hike anytime soon although the committee may discuss about this fact in next couple of FOMC meetings. Powell said that the “terminal rate” may be higher than what was expected in September FOMC meeting.
Per Powell, “We still have some ways to go and incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected.” At the same time, regarding the slowing down of monetary tightening, he said, “So that time is coming, and it may come as soon as the next meeting or the one after that. No decision has been made.”
Market participants are worried that the Fed will not be able to contain inflation with a soft landing of the economy. The fed Chair also agreed with this scenario. “Policy needs to be more restrictive, and that narrows the path to a soft landing,” Powell said. Investors remained concerned about a recession in early 2023.
Economic Data
Automatic Data Processing Inc. (ADP - Free Report) said in its National Employment report that private employment increased by 239,000 in October, beating the consensus estimate of around 200,000. September’s payroll was revised downward to 192,000 from 208,000 reported earlier. In October, services sector added 247,000 jobs while the goods producing sector shed 8,000 jobs.