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Following a recent press conference held by Federal Reserve Chair Jerome Powell, the stock market experienced a notable decline. The session aimed to address concerns regarding the rate cuts and economic forecasts, but it instead raised further uncertainty among investors.
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The Dow Jones Industrial Average fell sharply by 780 points, representing a 1.8% drop, immediately after Powell concluded the Q&A segment of his press briefing. The losses extended to the S&P 500, which saw a decrease of 2.3%, while the Nasdaq Composite endured a more significant plunge of 3.2%.
The downward trend was reflected in the performance of the S&P 500, where only 46 of its stocks rose, marking a continuation of negative breadth for a total of 13 days. Notably, the Dow is now on a ten-day losing streak, the longest since 1974.
The Federal Reserve announced a quarter-point cut in interest rates but indicated considerable uncertainty about future inflation and interest rates into 2025. The increase in yields was apparent as the 2-year Treasury note rose to 4.363%, while the 10-year yield also climbed to 4.499%.
Investor sentiment was further soured by the surge in the CBOE Volatility Index, which increased by 22% to reach 19.36, signaling a market characterized by heightened volatility.
Market analyst David Rosenberg from Rosenberg Research noted, ‘Although central bank officials project only two quarter-point cuts for 2025, revisions to payroll numbers and rising unemployment could potentially shift expectations to four cuts in the new year.’ He commented, ‘As we have seen over the past fifteen months, it doesn’t take much for the Federal Reserve to adjust its strategy.’
