"(Powell has been) pretty adamant, he dashed hopes that we were near the turning point where the Fed was close to pausing rates," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. "‘Higher for longer’ is the mantra that’s going to continue, at least to the end of the week until the (February employment report) data, which could pour gasoline or water on it." Data released on Wednesday painted a picture of U.S. economic hardiness, and did very little to assuage those fears. Job openings eased less than expected, private payrolls came in hotter than estimates, and demand for home loans increased, despite the ongoing upward trajectory of mortgage rates.
Robust economic data could embolden the central bank to keep the Fed funds target rate higher for longer. Financial markets have priced in a 70.5% likelihood of a 50 basis point hike to the key interest rate at the conclusion of the Fed's March meeting, according to CME's FedWatch tool.
The Dow Jones Industrial Average fell 97.33 points, or 0.3%, to 32,759.13, the S&P 500 gained 1.5 points, or 0.04%, to 3,987.87 and the Nasdaq Composite added 20.26 points, or 0.18%, to 11,550.59. European stocks reversed direction as Chairman Powell commenced his second day of testimony. The pan-European STOXX 600 index rose 0.06% and MSCI's gauge of stocks across the globe shed 0.15%. Emerging market stocks lost 0.96%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.33% lower, while Japan's Nikkei rose 0.48%. Benchmark Treasury yields eased following the economic data.
Benchmark 10-year notes last rose 13/32 in price to yield 3.9246%, from 3.975% late on Tuesday. The 30-year bond last rose 26/32 in price to yield 3.8412%, from 3.888% late on Tuesday. The greenback was nominally lower against a basket of world currencies after touching a three-month high in Tuesday's session after investors digested Powell's hawkish testimony. The dollar index fell 0.04%, with the euro up 0.03% to $1.055. The Japanese yen strengthened 0.16% versus the greenback at 136.93 per dollar, while Sterling was last trading at $1.1835, up 0.07% on the day. Crude prices extended Tuesday's sell-off, which was driven by concerns over higher interest rates.
U.S. crude fell 1.57% to $76.36 per barrel and Brent was last at $82.89, down 0.48% on the day. Gold saw a modest bounce from a near one-week low. Spot gold added 0.4% to $1,820.10 an ounce.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates YTD Global asset performance Asian stock markets ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Naomi Rovnick in London, additional reporting by Ankur Banarjee in Singapore. Editing by Elaine Hardcastle and Toby Chopra)
Twitter: @naomi_rovnick;))