Stocks dipped slightly today as traders hit the brakes after last week’s bull run. The drop came while investors mulled over Jerome Powell’s recent inflation remarks before Congress. The S&P fell 0.46% while the Dow Jones barely budged. The tech-heavy Nasdaq took a 1.2% hit.
Key tech players, which had previously soared due to AI-driven optimism, witnessed a pullback. Shares of Amazon slipped 1% following a lawsuit by the Federal Trade Commission alleging that the company tricked millions into Prime subscriptions and then obstructed their cancellation attempts. Nvidia, boasting a near-200% year-to-date rise, dropped over 3%. Google-parent Alphabet and Netflix both fell by more than 2%, while Apple’s stocks saw a 1% decline.
Elsewhere, FedEx shares decreased by 2.4% after the delivery giant posted below-forecast revenues for the recent quarter. Winnebago’s shares tumbled over 5% as the company failed to meet third-quarter revenue estimates.
Powell warned of more imminent rate hikes in a bid to tackle inflation, building on last week’s meeting where the Fed refrained from a rate hike after a series of 10. Nevertheless, the committee hinted at two more quarter-point increases before the year ends. “Most FOMC participants expect a further rate hike by year-end,” said Powell in his statement for the House Financial Services Committee.
“But at last week’s meeting, considering how far and how fast we have moved, we judged it prudent to hold the target range steady to allow the Committee to assess additional information and its implications for monetary policy,” Powell added.
The Fed Chairman then addressed the recent US banking crisis, claiming that banks remain “sound and resilient.”
“The recent bank failures, including the failure of Silicon Valley Bank, and the resulting banking stress have highlighted the importance of ensuring we have the appropriate rules and supervisory practices for banks of this size,” Powell said.
After a couple of days of losses, investors are pumping the brakes on their recent bullish attitude. The Dow was down by 245.25 points (0.72%) on Tuesday, while the S&P 500 and the Nasdaq slipped 0.47% and 0.16%, respectively. This lull comes after a period of market exuberance where the S&P 500 achieved its highest level since April 2022 and marked five straight weeks in the green.
The equity boom of the past few weeks has been a welcome relief to bulls. But as Fed speakers continue to emphasize rate hikes, high-flying growth stocks have a reason to pause. This, combined with the market’s narrow breadth, could pull down the S&P further given how overbought equities looked at their recent highs.