US stocks took a hit on Wednesday, with the S&P 500 notching its fourth consecutive loss as tech stocks led the market lower. The Nasdaq fell more than 1% as investors grappled with the prospect of higher interest rates following comments from Federal Reserve Chair Jerome Powell.
Nvidia was among the tech stocks hit hardest, with shares of the chip maker sliding nearly 4%. Other tech giants like Netflix, Meta, Apple, and Microsoft also saw declines throughout the day.
The recent hawkish comments from Powell have shifted investors’ rate expectations, with many now anticipating higher interest rates for a longer period of time. Powell’s remarks this week suggested that the Fed may hold off on rate cuts until they are more confident that inflation is returning to its 2% target.
The Fed’s April Beige Book, released on Wednesday, further fueled concerns about inflation. The report indicated that some central bankers are worried about the potential for a resurgence in inflation, particularly in input and output prices.
Market expectations for a June rate cut have dwindled, with just a 16% chance of a cut at the upcoming FOMC meeting. Investors are now projecting only 1-2 rate cuts by the end of the year, a significant decrease from earlier forecasts.
As investors await further guidance from Fed officials, they are closely monitoring the path of Fed policy for the remainder of the year. Comments from Fed officials after the closing bell on Wednesday and throughout Thursday could provide more insight into the central bank’s plans.
Despite the market downturn, other commodities saw mixed results on Wednesday. West Texas Intermediate crude oil dropped 3.05% to $82.76 a barrel, while gold slipped 0.55% to $2,369 per ounce. The 10-year Treasury yield fell seven basis points to 4.583%, and Bitcoin dropped 3.06% to $61,063.
Overall, the market turbulence reflects the uncertainty surrounding interest rates and inflation, as investors navigate the evolving economic landscape.
