While you were sleeping: Stocks, bonds fall on Powell’s economic optimism
By Margreet Dietz
Feb. 28 (BusinessDesk) - Wall Street moved lower as did US Treasuries, while the dollar rose, amid concern comments from
Federal Reserve Chairman Jerome Powell suggested the central bank might have to raise interest rates more than
previously thought.
In prepared remarks for his first testimony as Fed chairman before House Financial Services Committee, Powell pointed to
“further gradual increases in the federal funds rate,” adding that, “as always, the path of monetary policy will depend
on the economic outlook as informed by incoming data.”
The Fed has so far flagged its expects to raise rate three times this year. However, Powell, who took over the central
bank helm from Janet Yellen earlier this month, also said he has become more upbeat about the economic outlook.
“My personal outlook for the economy has strengthened since December,” Powell said in response to a question about what
would prompt the Federal Open Market Committee to step up the pace of policy tightening, Bloomberg reported.
“We’ve seen continuing strength in the labour market,” Powell said. “We’ve seen some data that will in my case add some
confidence to my view that inflation is moving up to target. We’ve also seen continued strength around the globe, and
we’ve seen fiscal policy become more stimulative.”
He’s set to testify again on Thursday, before the Senate Banking Committee.
In 1.22pm trading in New York, the Dow Jones Industrial Average slipped 0.1 percent, while the Nasdaq Composite Index
slid 0.5 percent. In 1.06pm trading, the Standard & Poor’s 500 Index declined 0.3 percent.
US Treasuries dropped, sending the yield on the 10-year note six basis points higher to 2.92 percent.
Powell “is optimistic,” Ward McCarthy, chief financial economist at Jefferies, told Bloomberg. “He is sending a clear
message: The economy is back to normal and we have to get policy back to normal.”
Even so, a Commerce Department report showed orders for durable goods fell more than expected in January, sliding 3.7
percent from December.
“Growth this year should be strong, maybe even in the 3 percent range, but to get there, current business and consumer
spending patterns have to change,” Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania,
told Reuters.
The Dow fell as declines in shares of Walt Disney and those of Nike, down 4 percent and 1.7 percent respectively,
outweighed gains in shares of Intel and those of Boeing, recently up 2.6 percent and 1.6 percent respectively.
In Europe, the Stoxx 600 Index finished the day with a 0.2 percent decline from the previous close. Germany’s DAX Index
inched 0.01 percent lower, the UK’s FTSE 100 index retreated 0.1 percent, while France’s CAC40 Index fell 0.3 percent.
(BusinessDesk)
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