Stock indexes fell as investors digested Thursday’s comments from Federal Reserve Chairman Jerome Powell. After Chairman Powell’s speech, the odds of a 25 basis point rate cut in December plummeted. Bond yields also rose in response to the comments, on signs of economic strength.
U.S. stocks fell on Friday morning after Wall Street withdrew expectations for a rate cut in December.
Federal Reserve Chairman Jerome Powell tapered off Thursday afternoon after suggesting the central bank would take its time with easing policy, citing continued strength in the U.S. economy. has begun.
“The economy is not sending a signal that there is an urgent need to cut rates,” he said.
Immediately after Powell’s remarks, the probability of a 25 basis point (bp) rate cut fell from 80% to less than 60%, according to calculations by the CME FedWatch tool. As of Friday morning, the odds remained low, at about 58%.
Continuously strong economic indicators are also influencing expectations for interest rate cuts. New figures on Friday showed U.S. retail sales rose in October due to a surge in car purchases.
Bond yields rose while the three major indexes headed for their first post-election week of decline. The yield on the two-year Treasury note, which is most sensitive to short-term interest rate forecasts, has risen 7 basis points over the past two days.
Here are the U.S. indices immediately after the opening bell at 9:30 a.m. Friday:
Here’s what else is going on:
In Commodities, Fixed Income and Cryptocurrencies:
The oil market has fallen. West Texas Intermediate crude oil fell 0.96% to $68.04 per barrel. Brent crude oil, the international benchmark, fell 0.94% to $71.88 per barrel. Gold was almost flat at $2,572 an ounce. The 10-year Treasury note rose 4 basis points to 4.459%, and Bitcoin rose 2.28% to $90,053.
