S&P 500 slides in volatile action as investors try to gauge the Fed’s next rate move – CNBC

We're in for a long period of rates above four percent, says former Dallas Fed President Richard Fisher

Stocks fell on Wednesday in wild action as traders tried to interpret the Federal Reserve’s next move after it delivered another widely expected three-quarter point interest rate hike.

The S&P 500 was last down 1.5% and Nasdaq Composite was off by 2.2%. The Dow Jones Industrial Average last traded 320 points lower, or 1%. The major averages bounced between gains and losses in volatile trading following the Fed’s afternoon decision.

The central bank implemented another 0.75 percentage point rate increase. The new statement hinted at a possible policy change, saying the Fed “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”

Stocks initially surged as traders cheered the potential of a possible slowdown in the central bank’s tightening pace.

However, the major averages declined after Fed Chair Jerome Powell said in a press conference that rates could still go higher.

“We still have some ways to go and incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected,” he said.

Stocks hit their lows of the session when Powell said it was “premature” to talk about pausing hikes.

“We have a ways to go,” said the central bank chair.

“The initial reaction is investors were looking for some acknowledgment there’s two-way risk … they at least opened the door for that,” said Keith Lerner, Truist’s chief market strategist. “They’ve done these super-sized rate hikes. That works with a lag. The market wants the Fed to move away from that myopic focus on inflation. They did that.”

The rate decision comes after the release of strong jobs data, with better-than-expected private payrolls data for October painting a resilient labor market. The JOLTS report Tuesday also conveyed a tight jobs market despite the Fed’s aggressive tightening clip.

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