Wall Street’s main indexes fell on Friday after Federal Reserve Chair Jerome Powell indicated there was no need to hasten interest-rate decreases, raising US Treasury yields and weighing on stocks.
In a speech on Thursday, Powell cited continuing economic expansion, a strong labor market, and inflation over the Fed’s 2% target as reasons the central bank can afford to be cautious about the speed and scope of future rate decreases.
Powell’s remarks came after consumer and producer price data this week showed continuing inflation. On Friday, data indicated that US retail sales rose somewhat more than predicted in October, but the underlying momentum in consumer spending appeared to stall at the start of the fourth quarter.
According to the CME FedWatch tool, traders upped their bets that the Fed will leave interest rates on hold at its December meeting, pricing in a 41.3% possibility, up from 14% the previous month.
“Overall, retail sales were pretty excellent. That’s exactly what Powell was saying yesterday, that if the economy remains reasonably strong and inflation approaches our target, they can afford to be patient and cut rates more slowly than previously thought,” said Mike Dickson, head of research and quantitative strategies at Horizon Investments.
The Dow Jones Industrial Average slid 149.62 points, or 0.34%, to 43,601.24, the S&P 500 dropped 40.21 points, or 0.68%, to 5,908.96, and the Nasdaq Composite plummeted 237.47 points, or 1.24%, to 18,870.18.
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