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Wall Street extended its sell-off on Wednesday as U.S. Federal Reserve Chairman Jerome Powell’s congressional testimony reinforced the central bank’s campaign to rein in inflation as he hinted at the likelihood of further interest rate hikes.
All three major U.S. stock indexes were on track to notch their third straight daily declines, with interest rate sensitive momentum stocks weighing the tech-laden Nasdaq down most.
Tesla Inc (TSLA.O), along AI-related stocks such as Microsoft Corp (MSFT.O) and Nvidia Corp (NVDA.O) were the heaviest drags.
In his testimony before the U.S. House Financial Services Committee, Powell reiterated the fact that the central bank remains “strongly committed to bringing inflation back down to our 2% goal,” and said it would be “a pretty good guess” that future rate hikes are in the cards if the economy continues on its current path.
“Powell is not going to diverge from what he said at the press conference last week; the Fed is going to be hawkish until inflation reaches 2%,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. “The Fed is keeping this tough talk going because they don’t want the markets to get over enthusiastic.”
At last glance, financial markets have priced in a 79% likelihood of another 25 basis point interest rate hike at the conclusion of July’s monetary policy meeting, according to CME’s FedWatch tool.
SOURCE:REUTERS
