Stocks sold off sharply Friday after Federal Reserve Chair Jerome Powell said in his Jackson Hole speech the central bank won’t be turning dovish in its fight against rampant U.S. inflation running at Carteresque 40-year highs.
The Dow Jones Industrial Average dropped 611 points, or 1.85%, after initially seesawing during the Fed chair’s comments. The S&P 500 fell 2.18% and the Nasdaq Composite slid 2.71%.
Those moves follow a hawkish speech from the Fed chair who reiterated a tough stance against inflation, spurring investors to weigh the implications of higher interest rates for longer.
“Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy,” Powell said.
The major averages were on pace for their second straight down week. The Dow is on track for a 2.9% decline. The S&P 500 and Nasdaq Composite are heading to losses of roughly 2.8% and 3.2%, respectively.
Tech giants in the group helmed the decline, with shares of Alphabet sliding nearly 4%. Meta lost 2.5% and Netflix fell 2%. Twitter lost 1.5%. [Apple shed 2.08%.]
Tech names are especially sensitive to rising interest rates, which hurt the value of the stocks’ future earnings.
MacDailyNews Take: In January, Interactive Brokers founder Thomas Peterffy said, “Inflation is 7% — 1% or 2% [in interest rate hikes] doesn’t mean anything. If they really wanted to stop inflation, they would have to raise rates to 4%, 5%, 6%.”
‘Tis best to get a handle on inflation, if you know how, while you still can. – MacDailyNews, May 11, 2021
Stop the misguided crusade against domestic energy production and profligate federal spending and inflation will be stopped dead in its tracks. It’s not difficult. – MacDailyNews, May 11, 2022
For new generations, sometimes tough lessons have to be retaught and learned the hard way. As we go through this, remember: It’s always darkest before the dawn. – MacDailyNews, July 14, 2022
Inflation is repudiation. — Calvin Coolidge
When a business or an individual spends more than it makes, it goes bankrupt. When government does it, it sends you the bill… [which] comes in two ways: higher taxes and inflation. Make no mistake about it, inflation is a tax and not by accident. — Ronald Reagan
Please help support MacDailyNews. Click or tap here to support our independent tech blog. Thank you!