Major Dow Jones Averages Hurting after Federal Reserve Announcement
On Wednesday, stocks were in decline, with major averages taking a hard hit at the Dow Jones.
The Dow has not been hit this hard since December, and it was even worse for Nasdaq. The last time that market had been this low was in September. The S&P 500 was hit as well, dropping to its lowest point since September.
All of this was the results of a Federal Reserve chairman Jerome Powell issuing a statement on central bank interest rate cuts. He said that it is unlikely the Federal Reserve committee will be confident by March to cut the internet rates. The statement was not as definitive as some would have liked, but it was enough to bring the Dow Jones down by more than 300 points Wednesday.
It was only moments after the comments from Powell that the Dow Jones reached session lows. If anyone was expecting cuts in March, that hope has been defeated for now. The chairman said that the committee would need more information on inflation that looked encouraging to them before they could make a decision to cut interest rates at all.
The good news from the announcement was that no statement was issued about tightening bias. His part of the statement was cut out, and it referred specifically to additional policy firming.”
A Fine Finish
Overall, the markets finished positively in January, despite the Fed statements. There was not much in the way of monthly gains for the markets, but the S&P 500 advanced 1.6%. The Nasdaq grew by 1%, and the Dow gained 1.2%.
If the economy recovers as the Federal Reserve expects it to, then there could be interest rates cuts later on in the year, says Powell. The committee felt like the policy rate was “at its peak” for now., until the next tightening cycle.
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