Federal Reserve Chair Jerome Powell said interest rates are likely to be higher and raised faster than previously anticipated. Markets fell on the news.
Markets didn't like it. The Dow Jones Industrial Average shed 1.72%, the S&P 500 dropped 1.53% and the Nasdaq Composite lost 1.25%. There are some important statistics here: the Dow is now 0.9% below what it was at the start of the year, and the S&P, while still up 3.8%, closed below the psychological 4,000 level, suggesting that investors could get spooked further. Indeed, bank shares, which tend to be a bellwether for investors' sentiment about the economy, led losses.
But not everyone is convinced that monetary policy will tighten faster. "I do not think the Fed goes 50 bps at any of the remaining rate hike meetings at this point after already slowing the pace and will continue on with 25 bps until it finally stops," wrote Peter Boockvar of Bleakley Financial Group — though he admitted he could only come to this calm conclusion after taking an Advil.
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