Powell Chills Investors, Says 'I Don't Think It's Likely' Rate Cuts Arrive In March, Stocks Sink (UPDATED)
Portfolio Pulse from Piero Cingari
Federal Reserve Chair Jerome Powell indicated that a March rate cut is unlikely, emphasizing a data-dependent approach and the need for sustained inflation at 2% before considering rate reductions. This statement led to a downturn in the stock market, with the SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust (QQQ) experiencing losses, while the U.S. dollar index (DXY) strengthened.
January 31, 2024 | 8:56 pm
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NEGATIVE IMPACT
The Invesco QQQ Trust (QQQ) experienced a 1% drop as a result of Powell's remarks, suggesting a short-term bearish outlook for the ETF.
QQQ, which includes many tech stocks sensitive to interest rate changes, is negatively affected in the short term by the reduced likelihood of a rate cut, as higher rates can dampen growth stock valuations.
CONFIDENCE 90
IMPORTANCE 85
RELEVANCE 90
NEGATIVE IMPACT
The SPDR S&P 500 ETF Trust (SPY) fell 0.8% following Powell's comments against a March rate cut, indicating a short-term negative impact on the ETF.
The SPY ETF, which tracks the S&P 500, is directly impacted by shifts in market sentiment regarding interest rate expectations. Powell's comments have led to a recalibration of expectations, resulting in a short-term negative sentiment among investors.
CONFIDENCE 90
IMPORTANCE 85
RELEVANCE 90