US close: Stocks fall for third day as Powell warns of further hikes

dl jerome powell federal reserve open market committee virtual press conference 3 november 2021 chair fomc fed jay pd — Fed chair Jerome PowellSharecast / public domain image

Wall Street stocks experienced their third consecutive day in the red on Wednesday, after Federal Reserve chair Jerome Powell warned Congress that further rate hikes would be needed this year to combat inflation.

The comments stirred investor anxiety about the potential consequences on economic growth and profitability, leading to a broad sell-off.

At the close, the Dow Jones Industrial Average was down 0.3% at 33,951.52, while the S&P 500 lost 0.52% to finish at 4,365.69.

The tech-heavy Nasdaq Composite saw a more significant decline, tumbling 1.21% to conclude the day at 13,502.20.

On the currency front, the dollar was last down 0.01% on sterling to trade at 78.3p, while it dropped 0.05% against the common currency at 90.97 euro cents.

Against the yen, the greenback was last 0.05%, changing hands at JPY 141.81.

“Powell’s testimony has bolstered the dollar slightly, but the main pressure on the pound appears to be the worry about how the UK economy will cope as the BoE tightens the screw with higher rates,” said IG chief market analyst Chris Beauchamp earlier.

“Sterling looked overstretched at $1.28 last week, and has been due a pullback, so now it’s up to the BoE to deliver a supportive message tomorrow.”

Fed maintaining focus on job growth and price stability amid pressures, says Powell

Federal Reserve chair Jerome Powell confirmed in his semi-annual congressional address earlier that the central bank was continuing to prioritise its dual objectives of fostering optimal employment and maintaining price stability.

Powell's address to the House of Representatives' Financial Services Committee emphasised that almost all members of the Federal Open Market Committee anticipated the need to further increment interest rates before the end of 2023.

Despite the expectations, Powell noted that the FOMC decided to keep the target range steady at their latest meeting.

The decision was taken to provide policymakers with additional time to assess new information and consider its implications on monetary policy.

Powell painted a picture of a labour market stretched thin, with an average monthly hiring increase of 314,000 year-to-date.

The demand for labour currently outpaced the available supply of workers, which remained a significant economic challenge.

As for inflation, Powell conceded that the struggle to restrain surging price pressures was far from over.

He acknowledged that inflation was continuing to exceed the comfort level, adding that the journey towards returning to the two percent target still had considerable distance to cover.

Equities underperform amid corporate and regulatory developments

In equities, shipping titan FedEx Corporation saw a 2.51% drop in its stock value in the wake of disappointing quarterly revenues and guidance, both of which fell short of market expectations.

Meanwhile, recreational vehicle manufacturer Winnebago Industries also suffered a blow with a 1.28% decrease in its stock price.

The fall followed the release of third-quarter results that failed to inspire confidence among investors.

E-commerce behemoth Amazon.com didn't fare much better, with its shares slipping by 0.76%.

The downturn came after the Federal Trade Commission announced it was suing the company over allegations of deceptive practices to enrol customers in its Amazon Prime service.

Reporting by Josh White for Sharecast.com.

Dow Jones - Risers

Unitedhealth Group Inc. (UNH) $476.75 1.57%
Procter & Gamble Co. (PG) $149.44 0.86%
Merck & Co. Inc. (MRK) $111.16 0.84%
Chevron Corp. (CVX) $154.90 0.78%
McDonald's Corp. (MCD) $294.52 0.51%
Nike Inc. (NKE) $109.99 0.40%
Visa Inc. (V) $227.25 0.34%
Coca-Cola Co. (KO) $61.43 0.28%
Walmart Inc. (WMT) $154.46 0.19%
Caterpillar Inc. (CAT) $241.55 0.14%