US Stocks tumble after Powell hawkish-stance

The US stock market finished volatile session steep lower on Wednesday, 02 November 2022, after the Fed announced its widely expected decision to raise interest rates by another 75 basis points and Fed Chair Powell signals the central bank has more rate hiking ahead.

At the close of trade, the Dow Jones Industrial Average index stumbled 505.44 points, or 1.55%, to 32,147.76. The S&P500 index fell 96.41 points, or 2.5%, to 3,759.69. The tech-heavy Nasdaq Composite Index decreased 366.05 points, or 3.36%, to 10,524.80.

All 11 S&P500 sectors declined, with communication services, information technology, and consumer discretionary issues shed more than 3%, while energy, materials, and real estate lost 2.3%, 2.57%, and 2.6%, respectively.

 

Risk sentiment soured throughout the session after the U.S. Federal Reserve delivered a 75 basis point rate increase, with Federal Reserve Chair Jerome Powell noting that We still have some ways to go and incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected.

Wall Street witnessed a lower opening ahead of the Fed's Nov policy outcome. Meanwhile, the central bank delivered an expected 75 bps rate hike, along with dovish statements that signalled a possibly slower monetary tightening going ahead, which led to a brief rally on the Street.

However, the stocks began to decline after Powell's news conference. In a briefing with reporters, the Fed Chair said that the path to achieve a 'soft landing' has narrowed as the inflation hasn't come down.

Consumer discretionary and information technology stocks were among the worst performers of the day. Amazon, Netflix and Meta Platforms tumbled nearly 5% each. Tesla and Salesforce fell 5.6% and 6.1%, respectively.

CURRENCY NEWS: The dollar index fell following the release of the Federal Reserve statement. The dollar index was last at 110.73, down 0.7% for the session.

Treasury yields dropped after the Fed signaled a possible slowdown in the pace of increases. The yield on the 10-year Treasury traded 7 basis points lower to 3.97% after trading above 4% earlier in the day. The policy-sensitive 2-year Treasury yield fell 9 basis points to 4.44%.

Among Indian ADR, Dr Reddy's Labs fell 0.74% to $55.33, INFOSYS was down 2.64% at $18.41, Tata Motors fell 1.48% to $25.27, HDFC Bank shed 2.77% to $61.41, and Wipro fell 2.1% to $4.63. ICICI Bank declined 0.73% to $21.88. WNS Holdings fell 1.47% to $83.71 and Azure Power Global fell 2.5% to $5.46.

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