Hawkish Powell Comments Rattle Markets…..

U.S. equities finished lower following comments from Fed Chairman Jerome Powell that appeared to be more hawkish than after last week’s policy meeting. The markets also continued to grapple with uncertainty regarding the implications of the persisting war in eastern Europe. Treasuries moved sharply lower, and yields jumped, in the wake of Powell’s remarks, and the U.S. dollar ticked higher, while crude oil prices rallied, and gold was only modestly higher. Dow member Boeing Company fell after one of its 737-800 aircraft operated by China Eastern Airlines crashed in southern China. Meanwhile, M&A news dominated the headlines, with Berkshire Hathaway agreeing to acquire Alleghany Corporation for about $11.6 billion, and Anaplan agreeing to be acquired by software investment firm Thoma Bravo for approximately $10.7 billion. The economic calendar was dormant today but will heat later in the week with some manufacturing activity data on tap. Europe finished mixed amid the continued focus on the war in Ukraine, while markets in Asia also diverged.

The Dow Jones Industrial Average fell 202 points (0.6%) to 34,553, the S&P 500 Index declined 2 points to 4,461, and the Nasdaq Composite lost 55 points (0.4%) to 13,838. In heavy volume, 4.7 billion shares of NYSE-listed stocks were traded, and 5.5 billion shares changed hands on the Nasdaq. WTI crude oil rallied $6.88 to $109.97 per barrel. Elsewhere, the gold spot price traded $8.10 higher to $1,937.40 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was up 0.3% at 98.53.

Treasuries have accelerated to the downside following comments from Federal Reserve Chairman Jerome Powell at a Fed conference this morning, where he appeared to be more hawkish than what the Federal Open Market Committee (FOMC) provided in its statement last week, as well as in the presser that followed. The Chairman vowed strong action on inflation, reiterating the Committee’s post-meeting statement that rate increases will continue until the rise in prices is under control, conceding that Fed officials “widely underestimated” how long pricing pressures would last. He also added that the rate hikes could be even higher if necessary, with a move above a 25-basis point (bp) increase not off the table.

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