Stocks wavered Wednesday, attempting to recover from Tuesday’s broad-based selloff, spurred by comments from Federal Reserve Chairman Jerome Powell that hinted that interest rates may need to go higher for longer.
The Dow Jones Industrial Average fell 24 points, or 0.1%. The S&P 500 and Nasdaq Composite added 0.3% each.
Stocks briefly took a slight leg lower after data showed job openings fall less than expected in January. A stronger-than-expected February private payrolls report affirmed that the economy is standing strong despite the Fed’s hiking campaign, adding to investor concern that bigger rate increase may be ahead. It precedes Friday’s February jobs data after January’s blockbuster report.
“After the day that Powell shook markets, Wall Street is getting further signs that the job market still remains tight,” said Oanda’s senior market analyst Ed Moya, adding that traders are “on standby” ahead of Friday. “Disinflation trends won’t quickly return as the economy has too many job openings and while ADP is still viewed by many as unreliable, it does seem to make sense when you look at the construction and leisure hospitality components.”
Stocks are coming off a down session after comments from Powell’s Senate testimony cautioned lawmakers that the central bank’s terminal rate will likely be higher than previously anticipated due to stubbornly high economic data in recent weeks.
Following Powell’s remarks, traders are also betting on a bigger-than-expected hike at the central bank’s next policy meeting, with about 75% calling for a 50 basis point increase, according to CME Group’s FedWatch tool.
On Tuesday, the Dow closed nearly 575 points lower, while the S&P 500 slid 1.53% to close below the key 4,000 threshold. The Nasdaq Composite lost 1.25%. The sharp declines were accompanied by a spike in bond yields, with the rate on the 2-year Treasury surpassing 5% and touching the highest level since 2007.
Investors on Wednesday are closely watching Powell’s remarks…
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