U.S. Stocks Experiencing Significant Volatility Following Powell Remarks

Stocks have seen considerable volatility over the course of the trading session on Thursday, as traders react to remarks by Federal Reserve Chair Jerome Powell. The major averages have spent the day bouncing back and forth across the unchanged line.

Currently, the major averages are all in positive territory. The Dow is up 98.75 points or 0.3 percent at 33,763.83, the Nasdaq is up 45.22 points or 0.3 percent at 13,359.52 and the S&P 500 is up 12.66 points or 0.3 percent at 4,327.26.

The volatility on Wall Street comes after Powell delivered highly anticipated remarks at an Economic Club of New York luncheon,

Powell argued in prepared remarks that inflation is “still too high” and warned additional monetary policy tightening may be needed.

Powell noted that shorter-term measures of core inflation over the most recent three and six months are now running below 3 percent but cautioned these shorter-term measures are often volatile.

“In any case, inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal,” Powell said. “We cannot yet know how long these lower readings will persist, or where inflation will settle over coming quarters.”

He added, “While the path is likely to be bumpy and take some time, my colleagues and I are united in our commitment to bringing inflation down sustainably to 2 percent.”

Powell described the current stance of monetary policy as “restrictive” and reiterated Fed officials are willing to keeping policy restrictive until they are confident inflation is on a downward path.

Citing recent data showing the resilience of economic growth and demand for labor, Powell also warned additional monetary policy tightening could be needed.

“Additional evidence of persistently above-trend growth, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy,” he said.

Powell also addressed tightening financial conditions amid a recent increase in longer-term bond yields and said the Fed remains attentive to these developments, because persistent changes in financial conditions can have implications for the path of monetary policy.

Treasury yields have moved higher following Powell’s remarks, extending the upward trend seen over the past few sessions and once again reaching sixteen-year highs.

Sector News

Most of the major sectors are showing only modest moves on the day, contributing to the volatility by the broader markets.

Software stocks have shown a strong move to the upside, however, with the Dow Jones U.S. Software Index climbing by 1.4 percent.

Notable strength is also visible among retail stocks, as reflected by the 1.2 percent gain being posted by the Dow Jones U.S. Retail Index.

Airline stocks are also regaining ground following yesterday’s weakness, while pharmaceutical stocks are seeing considerable weakness.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index tumbled by 1.9 percent, while Hong Kong’s Hang Seng Index plunged by 2.5 percent.

The major European markets also moved to the downside on the day. While the U.K.’s FTSE 100 Index slumped by 1.2 percent, the French CAC 40 Index slid by 0.6 percent and the German DAX Index fell by 0.3 percent.

In the bond market, treasuries are off their lows of the session but still in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.3 basis points at 4.947 percent.

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