The Dow Jones Industrial Average closed higher, while the S&P 500 and Nasdaq Composite fell. Federal Reserve Chair Jerome Powell’s comments on potential rate hikes influenced market movements.
The Dow added 87.37 points (0.23%) to close at 37,903.29. The S&P 500 lost 0.34%, closing at 5,018.39, and the Nasdaq Composite slid 0.33% to 15,605.48. Powell’s remarks spurred a volatile day, with the Dow rallying over 530 points at its peak. The S&P 500 and Nasdaq were temporarily up 1.2% and 1.7%, respectively.
The Federal Reserve held interest rates steady, citing insufficient progress on inflation reduction towards its 2% target. However, Powell downplayed the likelihood of an immediate rate hike. “I think it’s unlikely that the next policy rate move will be a hike,” he stated.
The Fed also announced a slower pace of quantitative tightening by reducing the rate of bond portfolio runoff. This move was well-received by investors. Sonu Varghese, global macro strategist at Carson Group, commented that elevated inflation makes rate cuts unlikely soon, while the slower balance sheet reduction should ease upward pressure on bond yields.
The 10-year Treasury yield briefly dipped below 4.6% after Powell’s comments, calming fears of a potential surge above 5%. AI-related stocks struggled due to disappointing reports from industry leaders. Advanced Micro Devices fell 8.9% after a lukewarm revenue forecast, and Super Micro Computer dropped 14% on weak revenue.
Wall Street concluded a losing month, with the S&P 500 and Nasdaq down over 4%. The Dow suffered a 5% loss, its worst monthly performance since September 2022.