Dow Drops 100 Points As Market Sell-Off Returns On New Powell Inflation-Fighting Pledge – CNBC

Stocks fell Thursday as Wall Street weighed Federal Reserve Chair Jerome Powell’s comments on the central bank continuing to fight inflation.

The Dow Jones Industrial Average shed 110 points, or 0.35%. The S&P 500 fell 0.26%, and the Nasdaq Composite declined 0.28%.

Stocks slid during a Q&A session from Powell at the Cato Institute where he reiterated that the central bank will do what it takes to fight inflation. He also signaled that a pause in rate hikes or a pivot to cutting interest rates is not coming soon.

“History cautions strongly against prematurely loosening policy,” he said. “I can assure you that my colleagues and I are strongly committed to this project and we will keep at it until the job is done.”

Earlier in the morning, the European Central Bank hiked interest rates by 0.75 percentage point, raising its deposit to 0.75% from zero, in a largely expected move to tamp down inflation.

The stock market is coming off a solid rebound. On Wednesday, the major averages posted their best day since Aug. 10, with the Nasdaq snapping a seven-day losing streak.

Still, stocks remain in a downtrend overall as concerns about a slowing economy and further rate hikes from the Federal Reserve are pushing some investors away from riskier parts of the market.

“Recession risk is rising and we have been moving more defensive in our portfolios as a result. However, high inflation means that traditional ‘risk off’ strategies such as cash and government bonds can create a drag on total return,” Lauren Goodwin, economist and portfolio strategist at New York Life Investments, said in a note to clients.

“We are fully invested in our portfolios, using selective bets within that overall neutral-risk position to build resilience against volatility and inflation. In our equity sleeve, this includes a strong overweight to value equity and dividend payers,” Goodwin added.

The market has a lot more pain to endure if the S&P 500 falls under 3,815, says Fairlead’s Stockton

The major averages are still comfortably off their lows of the summer and are on track to snap a three-week losing streak. However, the downtrend has a lot of strength and investors shouldn’t get too ahead of themselves, said Fairlead Strategies’ Katie Stockton.

The charts analyst highlighted 3,815 as a key level to watch for the S&P 500, on CNBC’s “Squawk Box” Thursday. If the index falls below that, investors could suffer another big drop, she said.

“What we’re doing in our work is just trusting the downtrend and respecting the negative long-term momentum,” she said. “Of course now also the market has negative short term momentum, and we don’t want to fight against that.”

Read the full story on CNBC Pro.

— Tanaya Macheel

Fed Chair Powell vows to fight inflation

Federal Reserve Chairman Jerome Powell on Thursday reaffirmed his commitment to combating inflation by aggressive tightening.

“History cautions strongly against prematurely loosening policy. I can assure you that my colleagues and I are strongly committed to this project and we will keep at it until the job is done,” Powell said at a question-and-answer session at the Cato Institute, a Washington, D.C.-based think tank.

His remarks come with markets widely expecting the Fed to make a third consecutive 0.75 percentage point interest rate increase when it meets again Sept. 20-21.

— Yun Li, Jeff Cox

Dow falls more than 200 points at market open

U.S. stocks continued to slide Thursday morning, with the Dow dropping more than 200 points at the market open as investors digest future rate hikes.

The Dow Jones Industrial Average dropped 227 points, or 0.70%. The S&P 500 shed 0.68% and the Nasdaq Composite fell 0.81%. At the same time, bond yields ticked up, adding pressure to stocks.

– Carmen Reinicke

Initial jobless claims hit lowest level since May

Jobless claims continue to tick down, showing signs of labor market strength amid recession fears.

Initial jobless claims for the week ending Sept. 3 were 222,000, down about 6,000 from the previous week’s revised level according to the Labor Department. This marked the lowest number of initial claims since the week ending May 27.

Continuing claims also declined, coming in at 1,414,849 for the week ending Aug. 20.

– Carmen Reinicke

ECB hands out 0.75 percentage point rate hike

The European Central Bank on Thursday raised its benchmark interest rate by 0.75 percentage point, joining other central banks in handing out aggressive rate hikes to address high inflation.

It’s one of the largest increases for the central bank. The move lifted the ECB’s deposit rate to 0.75% from 0%.

The rate hike was largely anticipated by economists.

– Carmen Reinicke, Jenni Reid

It’s still a bear market, Boockvar says

“The sentiment set up for yesterday’s stock market rally was very helpful,” said Peter Boockvar, chief investment officer at Bleakley Financial Group in a Thursday note.

The market was oversold and saw a big drop in the number of bulls, per the group’s investor intelligence survey, Boockvar said. The number hit its lowest value since June, the recent market trough.

“Outside of these sharp market rallies, it’s still a bear market with the S&P 500 trading at a still rich 17.5x,” Boockvar said. “I don’t see how this multiple doesn’t compress to 15 or less inevitably.”

– Carmen Reinicke

First Solar pops after Goldman upgrade

First Solar rose more than 4% in the premarket after Goldman Sachs double-upgraded the solar stock to buy from sell.

“On the demand front, we see FSLR as one of the best levered to US demand tailwinds within our solar panel supplier coverage as the US accounts for roughly 80% of the company’s revenue,” analyst Brian Lee wrote.

CNBC Pro subscribers can read the full story here.

— Fred Imbert

European markets open higher ahead of ECB rate hike decision

European markets opened higher as investors await the ECB’s decision on its latest monetary policy moves.

The ECB expected to frontload a series of rate hikes in order to combat inflation, with analysts saying a “jumbo” rate hike of 75 basis points is a possibility.

The pan-European Stoxx 600 was up 0.11% in the first hour of trading. Insurance, banks and basic resources made the biggest gains, as retail firms fell 5.28%.

— Jenni Reid

Apple’s Asia suppliers rise after iPhone 14 announcements

U.S. dollar has legs to move even higher, Wells Fargo strategist says

The U.S. dollar has room to inch up even higher thanks to rate differentials on the back of a hawkish Federal Reserve, according to Wells Fargo Securities FX strategist Brendan McKenna.

“We think a lot of these international banks will not be able to raise rates as aggressively as the markets are priced in for,” he told CNBC’s “Squawk Box Asia.”

“So it’s kind of a combination of a more hawkish Fed and a less hawkish tightening cycle from these international central banks that support the dollar over the remainder of this year,” he said.

–Jihye Lee

CNBC Pro: Tesla or Rivian? Analyst sizes them up and gives one 190% upside

Shares of electric vehicle makers have largely sold off this year.

Nevertheless, one analyst is still optimistic about the planned energy transition — and that includes EVs — calling it one of the “greatest” investment opportunities since the internet revolution.

Here’s what George Gianarikas, senior analyst at Canaccord Genuity, says about buying EV market leader Tesla and younger upstart Rivian.

— Weizhen Tan

Goldman Sachs raises Fed hike forecasts for this year

Goldman Sachs revised its forecasts for upcoming Federal Reserve rate decisions year.

Analysts led by chief economist Jan Hatzius said in a note that the firm expects a 75-basis-point hike in September, up from a previous forecast of 50 basis points, as well as a 50-basis-point hike in November, also revised from a previous projection of 25 basis points.

It also expects a 25 basis point hike in December — citing officials’ recent hawkish commentary.

The note said Fed officials “have seemed to imply that progress toward taming inflation has not been as uniform or as rapid as they would like,” the note said.

–Jihye Lee

CNBC Pro: Wall Street pro predicts when the S&P 500 will rally — and reveals how to trade it

Market volatility is here to stay, according to market veteran Phil Blancato.

But the president and CEO of Ladenburg Thalmann Asset Management sees a “strong rally” on the cards as market conditions improve.

He predicts when the rally will be, and names his top picks to trade the volatility.

Pro subscribers can read more here.

— Zavier Ong

GameStop pops after announcing partnership with FTX, second-quarter results

Shares of GameStop rose 11% in extended trading after the company announced partnership with crypto exchange FTX.

GameStop, which rose to prominence as a meme stock in 2021 but is down 35% this year, launched an NFT business earlier this year. The company will now be carrying FTX gift cards in its store as part of the partnership. FTX and its billionaire founder Sam Bankman-Fried have made moves to backstop struggling crypto companies this year, but the release announcing the GameStop partnership did non mention any financial support.

GameStop also reported its second-quarter results, showing continued struggles in its retail business. The company saw losses and inventory increase while revenue and cash decreased.

— Jesse Pound, Melissa Repko

Stocks stage solid rally on Wednesday

The stock market enjoyed its best day since Aug. 10 on Wednesday, with widespread gains except for the energy sector.

• The Dow gained 1.4% and is now up 0.8% for the week
• The S&P 500 climbed 1.8% and is now up 1.4% for the week
• The Nasdaq Composite rose 2.1% and is now up 1.4% for the week
• The Russell 2000 small caps gained 2.2% and is now up 1.2% for the week.

— Jesse Pound, Christopher Hayes

from
https://collincountynewsonline.com/dow-drops-100-points-as-market-sell-off-returns-on-new-powell-inflation-fighting-pledge-cnbc/