Thursday’s statements by Jerome Powell, the head of the US Federal Reserve, not ruling out the scenario of a further interest rate hike, sent stock prices tumbling across the Atlantic and into Europe.
Jerome Powell‘s comments on Thursday dampened the spirits on Wall Street.
Speaking at the IMF, the chairman of the Fed (US Federal Reserve) said that “Fed officials are not convinced that interest rates are high enough to fight inflation, and that improving the supply of goods, services and labor may no longer be of much help”.
In short: the US central bank would “not hesitate” to raise rates further if necessary.
Indeed, according to the business press, even after Jerome Powell’s statements, a majority of traders still believed that the Fed would not raise rates before 2024.
The Powell effect
Nevertheless, the Powell effect was clearly felt on Wall Street on Thursday. After rising for the past eight days, the broad S&P 500 index retreated by 0.81% to 4,347.35 points. The Dow Jones was down 0.65% at 33,891.94 points, while the tech-heavy Nasdaq was down 0.94% at 13,521.45 points.
The Fed Chairman’s speech thus put a sharp brake on the optimistic trend in the markets, which in recent days had been counting on the scenario of major rate cuts next year. And it outweighed the good news of the week of November 4, namely the announcement of a fall in jobless claims across the Atlantic.
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