The Fed Can Take It’s Time On Rates – US Market Wrap

Stocks extended losses after Powell signaled the Federal Reserve is in no rush to cut rates as the economy is holding up.

The equity market closed near session lows, US two-year yields spiked and the dollar climbed after Powell’s remarks. Traders dialed back bets on a December rate reduction to around 55% from 80% in the previous day. Treasury two-year yields rose seven basis points to 4.35%.

Several policymakers have urged a cautious approach to further rate cuts in comments this week, in light of a strong economy, lingering inflation concerns and broad uncertainty. Their comments come at a time when the equity market is showing signs of fatigue following a post-election surge that spurred calls for a pause, with several measures highlighting “stretched” trader optimism.

The S&P 500 dropped 0.6%. The Nasdaq 100 slipped 0.7%. The Dow Jones Industrial Average lost 0.5%. Automakers like Tesla and Rivian slumped as a report that President-elect Donald Trump plans to eliminate the $7,500 consumer tax credit for electric-vehicle purchases. Walt Disney jumped on a profit beat.