US stocks fell Monday morning after Federal Reserve Chair Jerome Powell said Sunday the central bank is not ready to cut interest rates yet.
“We want to see more evidence that inflation is moving sustainably down to 2%. Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest rates,” he said in a “60 Minutes” interview with CBS that aired late Sunday.
The Dow slid 401 points, or 1% in early Monday trading. The S&P 500 declined 0.7% and the Nasdaq Composite lost 0.9%.
Treasury yields rose as investors continued to mull over Powell’s comments.
Powell dashed investors’ hopes for a rate cut in March at the Fed’s post-meeting press conference in January, with that optimism further waning after a shockingly strong January jobs report. Powell on Sunday doubled down on the unlikelihood of a cut next month.
“Those comments along with his statement on Wednesday … suggest that as long as inflation data comes in as it has been or better, the Fed will be cutting rates by the summer,” wrote Bespoke Investment Group analysts in a note on Monday.
Traders see a mere 15% expectation that the Fed will cut rates in March, compared to 46% a week ago. For June, financial markets are pricing in a 93% chance that the central bank will pare back rates.
Elsewhere, McDonald’s shares fell 3.9% after the fast-food chain reported mixed earnings and said that turmoil in the Middle East is hurting its business.
Boeing shares lost 1.2% after a new problem has been found during the production of 737 Max jets that will force Boeing to rework about 50 planes that have not yet been delivered.
Estee Lauder shares popped 13.5% after the cosmetics company reported a solid quarter and said it would lay off up to 5% of its employees.
Snap shares added 3.6% after the company said Monday that it is cutting 10% of its global headcount.
This is a developing story and will be updated.
Read the full article here