S&P 500 Ends Lower Amid Hawkish Fed Comments and Rate Cuts

Stocks fell on Wednesday as hawkish remarks from Fed Chair Powell led to higher bond yields and selling in chip stocks, despite earlier gains driven by positive housing data and a rate cut by the FOMC. The market remains cautious as the Fed is not in a hurry to ease monetary policy.

Date: 22-09-2024

AI Rating: 5

The report highlights a mixed performance in major stock indices, with the S&P 500, Dow Jones, and Nasdaq all closing lower after showing initial gains. This volatility is largely attributed to hawkish comments from Fed Chair Powell, who emphasized the Fed's cautious stance on monetary policy.

The Federal Open Market Committee (FOMC) delivered a significant cut to the federal funds rate by 50 basis points, which initially boosted stock prices. However, the projection of additional rate cuts and a reduction in GDP forecasts tempered enthusiasm. The FOMC's revised GDP forecast for 2024 is now at +2.0%, down from +2.1%, while the core PCE estimate was adjusted to +2.6% from +2.8%. These downward revisions in projections can create a cautious environment for investors as they signal slower economic growth.

Reports on housing starts and building permits showed growth, which helped bolster investor confidence momentarily. Housing starts rose +9.6% to a four-month high of 1.356 million, while building permits increased +4.9%. This could suggest a recovering sector that may contribute to economic stability.

Specific company performances were affected, particularly in the semiconductor sector, where key players like Intel and Nvidia experienced significant declines, attributed to overall weak sentiment following the Fed's comments. Additionally, ResMed's downgrade by Wolfe Research further impacted investor sentiment, leading to a notable price drop.

On the flip side, companies such as General Motors benefited from increased access to Tesla's Superchargers for EVs, which could enhance sales prospects. Other firms, like PayPal and VF Corp, saw positive market reactions due to new partnerships and stock upgrades respectively.

Overall, while the FOMC's actions may suggest a supportive stance towards the economy, the mixed signals regarding growth and inflation can lead to fluctuating investor sentiments.

Stocks: SPY DIA QQQ INTC NVDA AMD MRVL MU RMD SYY COR INCY HGV GM PYPL VFC VSCO GEHC X EXR