US Stocks fall post Federal Reserve Chair Powell's Remarks

Federal Reserve Chair Jerome Powell's remarks came as the latest batch of U.S. economy data released earlier in the day generated some uncertainty about the outlook for interest rates.

The major averages ended the day just off their lows of the session. The Dow slid 207.33 points (0.5%) to 43,750.86, the Nasdaq fell 123.07 points (0.6%) to 19,107.65 and the S&P 500 declined 36.21 points (0.6%) to 5,949.17.

Jerome Powell commented The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully, on lowering rates. He also expressed that the US economys performance was remarkably good and that Fed is attentive to risks to both its employment and inflation goals, noting cutting rates too quickly could hinder progress on inflation but cutting rates too slowly could unduly weaken economic activity and employment.

 

He further said, "We are moving policy over time to a more neutral setting but the path for getting there is not preset. Ultimately, the path of the policy rate will depend on how the incoming data and the economic outlook evolve."

The report said initial jobless claims slipped to 217,000, a decrease of 4,000 from the previous week's unrevised level of 221,000. The Labor Department released consumer price inflation data that matched with the estimates post which it also eleased a separate report showing producer prices in the U.S. also increased in line with economist estimates in the month of October. producer price index for final demand rose by 0.2% in October following a revised 0.1% uptick in September.

Meanwhile, the report said the annual rate of growth by producer prices accelerated to 2.4% in October from an upwardly revised 1.9% in September. The annual rate of producer price growth was expected to accelerate to 2.3% from the 1.8% originally reported for the previous month. The slightly faster than expected annual price growth combined with the jobless claims data showing continued strength in the labor market has added to recent uncertainty about the outlook for interest rates.

Biotechnology stocks moved sharply lower, dragging the NYSE Arca Biotechnology Index down by 2.8%. Healthcare and pharmaceutical stocks significantly weakened with the Dow Jones U.S. Health Care Index and the NYSE Arca Pharmaceutical Index falling by 1.6% and 1.5%.

Networking, steel and commercial real estate stocks also moved downwards while considerable strength remained visible among airline stocks. Reflecting the strength in the airline sector, the NYSE Arca Airline Index jumped by 1.8% after plummeting by 7.3% on Wednesday.

Asia Pacific stocks moved mostly lower. Japan's Nikkei 225 Index fell by 0.5% while China's Shanghai Composite Index tumbled by 1.7% and Hong Kong's Hang Seng Index dove by 2%. Meanwhile, the major European markets moved upside. While the U.K.'s FTSE 100 Index climbed by 0.5%, the French CAC 40 Index and the German DAX Index jumped by 1.3% and 1.4%.

In the bond market, treasuries regained ground after turning lower over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell 3.3 bps to 4.41%.

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