- Major US stock indices reversed early gains on Thursday amid aggressive comments from Fed Chairman Powell.
- The S&P 500 fell back to 4,400, having previously risen above 4,500 on early strength related to Tesla’s strong earnings.
Major US Stock Indices reversed early gains on Thursday, as US yields rebounded following aggressive comments from Fed Chairman Jerome Powell, who backed the possibility of multiple 50bp rate hikes at upcoming Fed meetings. Tesla’s strong gains (+2.8%) after the close on Wednesday helped the S&P 500 open Thursday about 0.75% higher and at one point break above the 4,500 level, but Powell’s comments that 50bp rate hikes were “on the table” at upcoming meetings, compounding an earlier suggestion by the Fed’s Mary Daly that the Fed would even consider a 75bp move, sent the index falling below 4,400 .
At current levels in the 4390s, the S&P 500 is trading with daily losses of almost 1.5%, with bears pointing to a test of monthly lows near 4,370. The Nasdaq 100, unsurprisingly, was the worst performer of the major US indices, falling closer to 2.0% and below 13,750 for the first time this month. The Nasdaq 100 is more heavily weighted by high P/E technology stocks and so-called growth stocks, which tend to suffer in an environment of rising interest rates.
The Dow, which leans a little more toward value/cyclical stocks that tend to hold up better when interest rates rise, fell just under 1.0% to leave 35,000 status. A weaker-than-expected US Philadelphia Fed manufacturing survey for April and strong weekly jobless claims figures had no impact on market sentiment, with the central bank’s speech taking the spotlight. .
Looking ahead, earnings remain in the spotlight and could offer the market a bit of a boost. For the most part, it’s been a decent earnings season so far, with the notable exception of the Netflix debacle earlier in the week. More recently, United Airlines Holdings and American Airlines Group posted strong results and saw strong gains on Thursday amid a rapid recovery in travel demand.
Source: Fx Street
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