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More than half of the stock market rally since President Trump took office has been erased.
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The turning point came on Thursday, when Fed Chairman Jerome Powell said the Fed would lower interest rates over time.
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This, combined with a string of positive economic data, has investors questioning whether a rate cut in December is necessary.
And just like that, half of the stock market’s euphoria after Trump’s inauguration disappeared.
Major U.S. indexes, led by the tech-heavy Nasdaq, fell sharply on Friday as investors accepted the fact that December’s interest rate cut may not happen as previously expected.
The turning point came on Thursday, when Federal Reserve Chairman Jerome Powell said he and the central bank were on good terms. No need to rush to cut interest ratesgiven the positive signals being sent by the economy.
Stocks turned lower in afternoon trading, and the pressure continued into Friday. of S&P500 fell as much as 1.6%, recouping more than half of its blistering 4% post-election gain. of Nasdaq Composite The stock fell 2.7% at its intraday low.
This week, the S&P 500 fell 2.2%, the Dow Jones Industrial Average fell 1.2% and the Nasdaq fell 3.2%.
The losses came as the probability of a 25 basis point (bp) rate cut in December fell. Investors are currently pricing in a 58% chance of that happening at the next meeting, down from about 80% before Powell’s speech, the paper said. CME FedWatch Tools.
The central bank governor’s comments came amid a flurry of encouraging U.S. economic data. Friday’s retail sales figures showed signs of strength, with Thursday’s Number of unemployment insurance applications It’s surprisingly light.
Stock investors are wondering what Mr. Trump will ultimately mean for the market now that the rush to buy everything is coming to an end. There are growing concerns that President Trump’s protectionist trade policies will push up inflation and ultimately necessitate higher interest rates.
Until now, investors seemed content to focus on President Trump’s tax cuts and deregulation plans. But now it appears Jerome Powell has given them something else to think about and worry about.
Here are the US indexes as of Friday’s 4pm close:
Here’s what else is going on:
