Stocks Sank as Powell Downplays Rate Cut

In the January meeting, the Federal Reserve (FED) opted to maintain Fed funds rate at 5.25%-5.5%, holding steady at its 23-year high for the fourth consecutive meeting, aligning with expectations. Policymakers conveyed that they are hesitant to lower rates until they are more confident in inflation sustainably approaching 2%. ?

During the press conference, Fed Chair Powell indicated?the likelihood of rate reduction sometime this year but emphasized that decisions will be made on a meeting-by-meeting basis, expressing skepticism about a cut in March. Simultaneously, the Fed omitted references to potential rate hikes in its statement, citing improved balance in the risks associated with achieving employment and inflation goals. ?

However, the Fed emphasized readiness to adjust monetary policy if emerging risks threaten those objectives. The central bank acknowledged a slight easing of inflation over the past year but highlighted that it remains elevated. Consequently, the US dollar strengthened and rebounded above 103.5 levels, while the US 10-year Treasury yield hovers near 2-week low of 3.97%. ?

Nonetheless, selling pressures hit stocks. During Wednesday’s trading session, Dow Jones fell by 0.82%, the S&P 500 went down by 1.61%, and the Nasdaq Composite plunged by 2.23%. All 11 sectors of the S&P concluded in the red territory, with communication services, technology, and energy leading the selloff.?

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