US stocks slide following comments from Fed Chair Jay Powell

Stocks slid on Thursday as Wall Street parsed commentary from Federal Reserve Chair Jerome Powell while monitoring a key milestone for a closely followed bond yield.

Powell noted that inflation was still too high and would likely require lower economic growth, while also noting recent data showed progress toward slowing prices. He also said that monetary policy was not yet too tight. Powell stated, “Incoming data over recent months show ongoing progress toward both of our dual mandate goals – maximum employment and stable prices.” But, “in any case, inflation is still too high,” he said. “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.”

Investors appeared to take away that the Fed would likely kept interest rates unmoved at least at its next policy meeting. The market is pricing in a 99% chance that the central bank leaves rates unchanged on Thursday, up from about 93% a day prior, according to CME Group’s FedWatch tool.

But market participants left unsure of how, or if, the Fed would move rates in the longer term, said Stephanie Lang, chief investment officer at Homrich Berg.

The Dow Jones Industrial Average shed a 0.75% The S&P 500 and Nasdaq Composite lost 0.85% and 0.96% respectively.

Rising bond yields also weighed on the market. The benchmark U.S. 10-year Treasury yield notched a high of 4.996% on Thursday, inching closer to the well-followed 5% level that was last crossed in 2007. After Powell’s remarks were released, the yield hovered near that high.

Elsewhere, traders also parsed the latest earnings reports. More than 15% of companies in the S&P 500 have already reported this earnings season, according to FactSet. Of those, more than 74% have surpassed Wall Street expectations.

Electric vehicle juggernaut Tesla slid more than 9% after the company missed analyst expectations on earnings and revenue in the third quarter. CEO Elon Musk also warned that the company’s Cybertruck will not produce much positive cash flow more than a year after production starts.

Netflix shares, on the other hand, jumped 16% after the streaming giant posted third-quarter earnings that beat estimates. The company got a boost from strong ad-tier subscriptions.
Beyond technology stocks, AT&T climbed more than 6% after beating expectations for the third quarter, while investment firm Blackstone slid 7.9% on a weaker-than-expected report.

Overall, all US sectors except for Communication Services finished lower. Real Estate was the worst performer.

Futures

The SPI futures are pointing to a 0.6 per cent fall.

Currency

One Australian dollar at 7:35 AM was buying 63.29 US cents.

Commodities

Gold gained 0.88 per cent. Silver added 0.20 per cent. Copper was flat. Oil gained 2.54 per cent.

Figures around the globe

European markets closed lower. London’s FTSE fell 1.17 per cent, Frankfurt lost 0.33 per cent, and Paris closed 0.64 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei dropped 1.91 per cent, Hong Kong’s Hang Seng fell 2.46 per cent while China’s Shanghai Composite closed 1.74 per cent lower.

The Australian share market closed 1.36 per cent lower at 6,982.

Ex-dividends

Kelly Partners Group (ASX:KPG) is paying 0.4392 cents fully franked
Sandon Capital Ltd (ASX:SNC) is paying 2.75 cents fully franked

Dividends payable

ARB Corp Ltd (ASX:ARB)
Austal Ltd (ASX:ASB)
Capitol Health Ltd (ASX:CAJ)
Charter Hall Social Infrastructure REIT (ASX:CQE)
COG Financial Services Ltd (ASX:COG)
Kelsian Group Ltd (ASX:KLS)
KMD Brands Ltd (ASX:KMD)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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