The Dow Jones Industrial Average closed marginally down on Wednesday, March 8, as the market battled to recover from Tuesday’s selloff.
In particular, the closing price for the Dow was 32,798.41, a decrease of 58.05 points (or 0.18%), while the closing price for the S&P 500 was 3,992.01, a gain of 0.14%. The final value of the Nasdaq Composite was 11,576.00, representing a gain of 0.4%.
The stock market had an up-and-down day as investors braced for a higher-than-expected interest rate rise after Federal Reserve Chairman Jerome Powell’s two days of testimony before congress this week.
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Recent reports on the labor situation exacerbated investors’ concerns that further rate rises may be on the horizon. Statistics revealed that job openings declined less than anticipated in January. A stronger-than-expected February private payrolls data confirmed that the economy is doing well despite the Fed’s hike.
The findings come ahead of Friday’s employment statistics for February, which follows January’s strong performance.
Powell warns Senate rate could be higher
Powell’s Senate hearing warned legislators that the central bank’s terminal rate would likely be higher than initially expected owing to persistently positive economic indicators. Wednesday brought more commentary, this time in the form of a speech Powell gave before the House Financial Services Committee.
Oanda’s senior market analyst Ed Moya stated:
“After the day that Powell shook markets, Wall Street is getting further signs that the job market still remains tight.”
Meanwhile, Nationwide’s Chief Economist Kathy Bostjancic added:
“It [Powell’s hawkish testimony] just raises idea that Fed may have to do more. Fact that they’re even willing to go rev it up introduces the idea even more so that they make a policy mistake — that this results in a hard landing for the economy.”
Even though Powell highlighted throughout his testimony that no decision had been made about the meeting in March, market participants are betting on a higher rate rise than what was anticipated. According to the FedWatch tool, more than 75% of traders are predicting a hike of 50 basis points.
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