The S&P 500 and Dow fell, taking an abrupt nosedive that reversed earlier solid gains after the U.S. Federal Reserve released its statement at the conclusion of its two-day policy meeting
All three major U.S. stock indexes gyrated wildly in the final minutes of a session that ended with the Dow joining the S&P in negative territory and the Nasdaq eking out a nominal gain.
The indexes enjoyed a brief surge after the Federal Open Markets Committee left key interest rates near zero. But those gains quickly evaporated as the Fed statement warned it would soon begin raising the Fed Funds target rate to combat persistent inflation related to the COVID-hobbled supply chain."With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate," the statement said.
Stocks slid into negative territory once Fed Chairman Jerome Powell's subsequent Q&A got under way, during which he warned that inflation remains above its long-run goal and supply problems are bigger and more long-lasting than previously thought. "When reporters asked Powell if the Fed would consider raising rates at every meeting, which would mean more than four times this year, he didn’t say they wouldn’t, which indicates a flexibility to raise rates much more quickly than anyone was expecting," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.
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