Stocks Reverse Wed. Gains After FED Rate Increase

JUL 29 2022·Updated JAN 20 2023

Story

Image credit: news

The Facts

On Thur., the stock market pulled back sharply as the Dow Jones Industrial Average dropped nearly 3.1% - more than 1k points - while the S&P 500 lost 3.6%, and the Nasdaq Composite decreased by 5%.
wapo
This is a dramatic reversal after markets posted large gains on Wed. following a half-percentage rate hike by the Federal Reserve and an announcement that the central bankers weren't yet considering a rate increase of 75 basis points.
Forbes
The market dip comes as equities are still recovering from a massive selloff in Apr. that saw the market's worst month since the onset of the pandemic.
Forbes
Tech shares have been particularly hard-hit after years of leading the market, with Apple slipping 5.6%, Netflix declining 7.7%, and Amazon dropping 7.6% on Thur. alone.
wsj
As expected when stocks fall, bond yields have been climbing alongside the Fed's tightening cycle. On Thur., the 10-yr treasury yield increased as much as 17 basis points to 3.09%, the highest since 2018.
Business Insider
According to experts, the midweek swings signify the challenges the economy faces as it's pulled in different directions with inflation spiking and growth slowing, yet with hiring remaining strong.
wapo

Sources Split

LEFT

CENTER

RIGHT

ESTAB
CRIT

CENTER

PRO
ESTAB

The Spin

Narrative A

Turbulence is expected in the market, and the recent volatility isn't surprising; nor does it suggest that the Fed is wrong to tighten. Markets are simply trying to make sense of a policy environment that it hasn't seen in decades.

wsj

Narrative B

While markets are no stranger to volatility, the whiplash over the last two days is unparalleled. Once an anchor of stability for the market, the central bank is now its chief antagonist. Although the Fed Chair expressed confidence, the risk of a recession is a threat that investors can't ignore.

BNN