{"id":1467,"date":"2023-02-26T20:02:40","date_gmt":"2023-02-27T01:02:40","guid":{"rendered":"https:\/\/embarrdowns.com\/feds-interest-rate-hike-expectations-drive-markets-lower\/"},"modified":"2023-02-26T20:02:40","modified_gmt":"2023-02-27T01:02:40","slug":"feds-interest-rate-hike-expectations-drive-markets-lower","status":"publish","type":"post","link":"https:\/\/embarrdowns.com\/feds-interest-rate-hike-expectations-drive-markets-lower\/","title":{"rendered":"Fed\u2019s Interest Rate Hike Expectations Drive Markets Lower"},"content":{"rendered":"

On February 3, the University of Michigan’s consumer sentiment index was revised upward by 0.6 points to a 13-month high of 67.0, according to separate data.[0]<\/a><\/sup> This increase was driven by an improvement in the short-term economic outlook, though consumers still exhibited considerable uncertainty over the short-term inflation.[1]<\/a><\/sup> The Commerce Department also released the personal consumption expenditures price index which showed the cost of U.S. goods and services jumped 0.6% in January, its biggest rise since last summer.[2]<\/a><\/sup> This data was seen cementing expectations that the Federal Reserve will continue lifting its key interest rate above 5% in its effort to bring down inflation. <\/p>\n

The yield on the 10-year Treasury note rose to 3.94% on Friday morning, on track for a fifth-straight weekly advance, while the 2-year Treasury was up 1 basis point at 4.712%.[3]<\/a><\/sup> The rate-sensitive tech stocks sent the Nasdaq down nearly 1.7%, while the S&P 500 and the Dow Jones Industrial Average also closed more than 1% lower.<\/p>\n

Carvana (CVNA) plummeted 20.5% after the online auto dealer reported a sharp year-over-year decline in units sold (-23%) and revenue (-24%) in Q4.[1]<\/a><\/sup> Additionally, the company announced plans to reduce operating costs by $1 billion by the second quarter, but not with layoffs.[1]<\/a><\/sup> <\/p>\n

Booking Holdings (BKNG) is up more than +1% after reporting Q4 revenue of $4.05 billion, slightly beating the consensus of $3.90 billion.[4]<\/a><\/sup> Quarterly earnings soared 56% a share, easily beating.[5]<\/a><\/sup><\/p>\n

As markets continue to price in a 27% chance that the central bank will raise its key rate by 50 basis points at its next meeting, with a 73% probability that the hike will match February’s 25-basis-point increase, remarks by at least one other Fed official on Friday, though, only underscored lingering worries about higher-for-longer interest rates.[3]<\/a><\/sup><\/p>\n

In conclusion, the data released on Friday confirmed the market\u2019s expectation that the Fed will continue lifting its key interest rate above 5% in its effort to bring down inflation. This caused a sell-off in the bond market, sending yields higher, while the rate-sensitive tech stocks sent the Nasdaq down nearly 1.7%.<\/p>\n

0. <\/span>“Markets suffer worst week of 2023 on consumer and producer price reports” Courthouse News Service, 24 Feb. 2023, https:\/\/www.courthousenews.com\/markets-suffer-worst-week-of-2023-on-consumer-and-producer-price-reports\/<\/a><\/a><\/p>\n

1. <\/span>“Stock Market Today: Hot Inflation Data Sinks Stocks” Kiplinger’s Personal Finance, 24 Feb. 2023, https:\/\/www.kiplinger.com\/investing\/stocks\/stock-market-today-022423-hot-inflation-data-sinks-stocks<\/a><\/a><\/p>\n

2. <\/span>“U.S. stocks end sharply lower, Dow suffers fourth straight weekly fall after Fed\u2019s favorite inflation gauge runs hotter than expected” MarketWatch, 24 Feb. 2023, https:\/\/www.marketwatch.com\/story\/u-s-stock-futures-weaken-ahead-of-key-inflation-data-efb982a2<\/a><\/a><\/p>\n

3. <\/span>“Another hot inflation report sends Nasdaq, S&P 500, Dow lower (SP500)” Seeking Alpha, 24 Feb. 2023, https:\/\/seekingalpha.com\/news\/3940862-another-hot-inflation-report-sends-nasdaq-sp-500-dow-lower<\/a><\/a><\/p>\n

4. <\/span>“Stocks Tumble as Strong Economic Reports Bolster the Case for Tighter Fed Policy” Barchart, 24 Feb. 2023, https:\/\/www.barchart.com\/story\/news\/14527214\/stocks-tumble-as-strong-economic-reports-bolster-the-case-for-tighter-fed-policy<\/a><\/a><\/p>\n

5. <\/span>“Stocks Sell Off As Hot Inflation Revives Fed Fears: Weekly Review” Investor’s Business Daily, 24 Feb. 2023, https:\/\/www.investors.com\/news\/stock-market-sells-off-as-inflation-revives-fed-fears-nvidia-walmart-home-depot-earnings\/<\/a><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

On February 3, the University of Michigan’s consumer sentiment index was revised upward by 0.6 points to a 13-month high of 67.0, according to separate data.[0]<\/a><\/sup> This increase was driven by an improvement in the short-term economic outlook, though consumers still exhibited considerable uncertainty over the short-term inflation.[1]<\/a><\/sup> The Commerce Department also released the personal consumption expenditures price index which showed the cost of U.S. goods and services jumped 0.6% in January, its biggest rise since last summer.[2]<\/a><\/sup> This data was seen cementing expectations that the Federal Reserve will continue lifting its key interest rate above 5% in its effort to bring down inflation. <\/p>\n

The yield on the 10-year Treasury note rose to 3.94% on Friday morning, on track for a fifth-straight weekly advance, while the 2-year Treasury was up 1 basis point at 4.712%.[3]<\/a><\/sup> The rate-sensitive tech stocks sent the Nasdaq down nearly 1.7%, while the S&P 500 and the Dow Jones Industrial Average also closed more than 1% lower.<\/p>\n

Carvana (CVNA) plummeted 20.5% after the online auto dealer reported a sharp year-over-year decline in units sold (-23%) and revenue (-24%) in Q4.[1]<\/a><\/sup> Additionally, the company announced plans to reduce operating costs by $1 billion by the second quarter, but not with layoffs.[1]<\/a><\/sup> <\/p>\n

Booking Holdings (BKNG) is up more than +1% after reporting Q4 revenue of $4.05 billion, slightly beating the consensus of $3.90 billion.[4]<\/a><\/sup> Quarterly earnings soared 56% a share, easily beating.[5]<\/a><\/sup><\/p>\n

As markets continue to price in a 27% chance that the central bank will raise its key rate by 50 basis points at its next meeting, with a 73% probability that the hike will match February’s 25-basis-point increase, remarks by at least one other Fed official on Friday, though, only underscored lingering worries about higher-for-longer interest rates.[3]<\/a><\/sup><\/p>\n

In conclusion, the data released on Friday confirmed the market\u2019s expectation that the Fed will continue lifting its key interest rate above 5% in its effort to bring down inflation. This caused a sell-off in the bond market, sending yields higher, while the rate-sensitive tech stocks sent the Nasdaq down nearly 1.7%.<\/p>\n

0. <\/span>“Markets suffer worst week of 2023 on consumer and producer price reports” Courthouse News Service, 24 Feb. 2023, https:\/\/www.courthousenews.com\/markets-suffer-worst-week-of-2023-on-consumer-and-producer-price-reports\/<\/a><\/a><\/p>\n

1. <\/span>“Stock Market Today: Hot Inflation Data Sinks Stocks” Kiplinger’s Personal Finance, 24 Feb. 2023, https:\/\/www.kiplinger.com\/investing\/stocks\/stock-market-today-022423-hot-inflation-data-sinks-stocks<\/a><\/a><\/p>\n

2. <\/span>“U.S. stocks end sharply lower, Dow suffers fourth straight weekly fall after Fed\u2019s favorite inflation gauge runs hotter than expected” MarketWatch, 24 Feb. 2023, https:\/\/www.marketwatch.com\/story\/u-s-stock-futures-weaken-ahead-of-key-inflation-data-efb982a2<\/a><\/a><\/p>\n

3. <\/span>“Another hot inflation report sends Nasdaq, S&P 500, Dow lower (SP500)” Seeking Alpha, 24 Feb. 2023, https:\/\/seekingalpha.com\/news\/3940862-another-hot-inflation-report-sends-nasdaq-sp-500-dow-lower<\/a><\/a><\/p>\n

4. <\/span>“Stocks Tumble as Strong Economic Reports Bolster the Case for Tighter Fed Policy” Barchart, 24 Feb. 2023, https:\/\/www.barchart.com\/story\/news\/14527214\/stocks-tumble-as-strong-economic-reports-bolster-the-case-for-tighter-fed-policy<\/a><\/a><\/p>\n

5. <\/span>“Stocks Sell Off As Hot Inflation Revives Fed Fears: Weekly Review” Investor’s Business Daily, 24 Feb. 2023, https:\/\/www.investors.com\/news\/stock-market-sells-off-as-inflation-revives-fed-fears-nvidia-walmart-home-depot-earnings\/<\/a><\/a><\/p>\n","protected":false},"author":3,"featured_media":1466,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47],"tags":[],"_links":{"self":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/1467"}],"collection":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/comments?post=1467"}],"version-history":[{"count":0,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/posts\/1467\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media\/1466"}],"wp:attachment":[{"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/media?parent=1467"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/categories?post=1467"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/embarrdowns.com\/wp-json\/wp\/v2\/tags?post=1467"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}