Stocks sink after Fed Chair Powell pleads for patience on rate cuts

NEW YORK  -  US stocks fell Monday after Federal Re­serve Chair Jerome Powell said Sunday the central bank is not ready to cut inter­est rates yet. “We want to see more evi­dence that inflation is moving sustainably down to 2 percent. Our confidence is ris­ing. We just want some more confidence before we take that very important step of beginning to cut interest rates.” 

The Dow slid 278 points, or 0.7 per­cent, paring its losses somewhat after falling by more than 400 points earlier in the session. The S&P 500 declined 0.3 perceand the Nasdaq Composite lost 0.1 percent. Treasury yields rose as in­vestors continued to mull over Powell’s comments. Powell dashed investors’ hopes for a rate cut in March at the Fed’s post-meeting press conference in Janu­ary, with that optimism further waning after a shockingly strong January jobs report. Powell on Sunday doubled down on the unlikelihood of a cut next month. 

The Personal Consumption Expen­ditures price index, the Fed’s preferred gauge for inflation, n December. Strip­ping out the more volatile energy and food components, the closely watched core PCE price index climbed 2.9 per­cent from the prior year and is at its low­est point since March 2021. While the headline PCE index is the official base for the target rate, Powell and other central bank officials often refer to core PCE in­flation as it’s generally considered a bet­ter signal of where inflation is headed. Traders see a mere 15 percent expecta­tion that the Fed will cut rates in March, compared to 46 percent a week ago. For June, financial markets are pricing in a 93 percent chance that the central bank will pare back rates. Elsewhere, McDonald’s shares fell 4.2 percent after the fast-food chain reported mixed earnings and said that turmoil in the Middle East is hurting its business. Boeing shares lost 1.9 per­cent after a new problem has been found during the production of 737 Max jets that will force Boeing to rework about 50 planes that have not yet been delivered. 

Estee Lauder shares popped 12.1 per­cent reported a solid quarter and said it would lay off up to 5 percent of its employees. Snap shares lost 3.2 percent , reversing earlier gains after the com­pany said Monday that it is cutting 10 percent of its global headcount.

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