US stock markets fell after Federal Reserve Chair Jerome Powell announced an evolving view on the threat of inflation.
At the long-awaited Fed meeting, Powell confirmed that the board now expects at least two rate rises in 2023 and that inflation in 2021 may be higher than expected, but still transitory.
He highlighted signs that inflation expectations within the economy were increasing, but that the economic recovery was not yet strong enough to support a ‘tapering’ of the US$120 billion in bond purchases.
The result was an increase in the 10-year bond rate which hit 1.57%, the most in months and a 260 point fall in the Dow Jones, down 0.8%.
The Nasdaq and S&P 500 fared better, falling 0.5% and 0.2%, respectively.
This was much less volatile than expected given the context of the announcement, suggesting markets were prepared for a speeding up of rate hikes.
Economically exposed companies were more resilient, with energy and travel groups including Occidental (NYSE: OXY) and Norwegian Cruise Lines (NYSE: NCLH) adding over 2% each.
On the other hand, the tech sector suffered smaller falls but was more widespread, with Facebook (NASDAQ: FB) down close to 2% and Amazon (NASDAQ: AMZN) gaining on the hopes of strong consumer spending.
US stock market movers
Here’s how other popular US stocks fared overnight.
- Appian (NASDAQ: APPN) up 4.8%
- MongoDB (NASDAQ: MDB) up 4.4%
- HubSpot (NYSE: HUBS) up 3.4%
- Shopify (NASDAQ: SHOP) up 3.4%
- Snapchat (NYSE: SNAP) down 3.3%
- Oracle (NYSE: ORCL) down 5.6%
- Roblox (NYSE: RBLX) down 8.0%
Back home on the ASX, the S&P/ASX 200 (ASX: XJO) is set to edge higher when the market opens on Thursday. For all the latest, check out Rask Media’s ASX 200 morning report.