Wall Street ends well down as Powell's speech affirms hawkish rate stance

Record ID: 1686409

  • Title: Wall Street ends well down as Powell's speech affirms hawkish rate stance
  • Date: 26th August 2022
  • Summary: FRANKLIN, TENNESSEE, UNITED STATES (AUGUST 26, 2022) (REUTERS) (SOUNDBITE) (English) CAPWEALTH CHAIRMAN AND CHIEF INVESTMENT OFFICER, TIM PAGLIARA, SAYING: "Chairman Powell essentially canceled Christmas. He told everybody, we're going to have to pay for the inflation that's in the system and that it's going to be painful.” WHITE FLASH (SOUNDBITE) (English) CAPWEALTH CHAIRMAN AND CHIEF INVESTMENT OFFICER, TIM PAGLIARA, SAYING: “I think the visibility of the bottom of the (U.S. stock) market won't occur till probably sometime next year when we see how far and how deep these increases in rates have to come to satisfy the Fed's concern about inflation.” WHITE FLASH (SOUNDBITE) (English) CAPWEALTH CHAIRMAN AND CHIEF INVESTMENT OFFICER, TIM PAGLIARA, SAYING: "I think the relationship between the interest rate hikes and the recession and the Fed's comments today make it much more likely that we are going to see a mild recession. How deep it goes just depends upon the calculation that they make on how far they can raise rates and tighten the money supply to battle inflation. It's not an exact science, and the Fed's never been very good at doing that and avoiding a recession.”
  • Embargoed: 9th September 2022 21:03
  • Keywords: Dow Nasdaq S&P 500
  • Location: NEW YORK, NEW YORK + FRANKLIN, TENNESSEE, UNITED STATES
  • City: NEW YORK, NEW YORK + FRANKLIN, TENNESSEE, UNITED STATES
  • Country: USA
  • Topics: Economic Events,Equities Markets,United States
  • Reuters ID: LVA002087826082022RP1
  • Aspect Ratio: 16:9
  • Story Text: Wall Street slumped on Friday (August 26) to close well down, as investors keen for a more modest interest rate path were disappointed by Federal Reserve Chief Jerome Powell signaling the central bank would keep hiking rates to tame inflation.
    The Nasdaq led declines among the three U.S. benchmarks, weighed by high-growth technology stocks which tumbled after rallying the previous day in anticipation of Powell's scheduled speech to the Jackson Hole central banking conference in Wyoming.
    The U.S. economy will need tight monetary policy "for some time" before inflation is under control, Powell said at the event. That means slower growth, a weaker job market, and "some pain" for households and businesses, he added.
    "Chairman Powell essentially canceled Christmas. He told everybody, we're going to have to pay for the inflation that's in the system and that it's going to be painful,” said Tim Pagliara, chairman and chief investment officer at CapWealth in Franklin, Tennessee.
    “I think the visibility of the bottom of the (U.S. stock) market won't occur till probably sometime next year when we see how far and how deep these increases in rates have to come to satisfy the Fed's concern about inflation,” added Pagliara.
    Investors knew further rate rises were coming, and they have been divided between whether a 75-basis-point and a 50-basis-point hike by the Fed was coming next month.
    However, recent data highlighting continued strength in the labor market, to offset two consecutive quarters of negative economic growth, had led to some speculating a more tempered pace of hikes could be forthcoming.
    All the 11 major S&P 500 sectors were lower, with the information technology, communication services, and consumer discretionary indexes among the heaviest declines.
    The S&P 500 lost 141.46 points, or 3.37%, to end at 4,057.66 points, while the Nasdaq Composite lost 497.56 points, or 3.94%, to 12,141.71.
    The Dow Jones Industrial Average fell 1,008.38 points, or 3.03%, to 32,283.40.
    (Production: Kyoko Gasha)
  • Copyright Holder: REUTERS
  • Copyright Notice: (c) Copyright Thomson Reuters 2022. Open For Restrictions - http://about.reuters.com/fulllegal.asp
  • Usage Terms/Restrictions: None
Register