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On Jan. 27, the stock market experienced significant declines following comments from Federal Reserve chairman Jerome Powell indicating that a rate cut in March was unlikely. The Dow Jones Industrial Average dropped 317.01 points, or 0.82 percent, closing at 38,150.30. The S&P 500 fell by 1.61 percent to 4,845.65, while the Nasdaq Composite lost 2.23 percent, finishing at 15,164.01, Barron’s reported.
“I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting to identify March is the time to do that,” Powell told reporters, CNBC reported.
Powell’s remarks had an immediate impact, with the major averages hitting session lows shortly after his statements. Traders had been eagerly awaiting the Fed announcement for signals regarding potential rate cuts, but Powell’s comments dashed expectations for a March cut, citing the need for further encouraging data on inflation.
Although the Federal Reserve refrained from indicating an imminent rate cut, it did remove language from its statement that suggested a tightening bias, indicating a potential shift in policy restraint later this year if economic conditions evolve as expected.
“We believe that our policy rate is likely at its peak for this tightening cycle and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint, at some point this year,” added Powell.
The market reaction was mixed, with some sectors experiencing significant declines. Alphabet, parent company of Google, saw its shares drop more than 7 percent, marking its worst day since Oct. 25. Other tech firms like Microsoft and AMD also experienced declines of nearly 3 percent each due to lower-than-expected forward guidance following quarterly results.
However, not all sectors were impacted negatively. Boeing shares climbed more than 5 percent following quarterly results that beat analyst estimates. The company’s CEO, Dave Calhoun, highlighted a renewed focus on safety moving forward, addressing recent issues tied to its 737 Max 9 aircraft, CNBC reported.
Overall, Jan. 31’s declines offset the markets’ monthly gains, but all three major averages ended January on a positive note. The S&P 500 added 1.6 percent, the Dow advanced 1.2 percent, and the Nasdaq gained 1 percent, Barron’s reported.
In the cryptocurrency market, Bitcoin fell as much as 2 percent after Powell’s comments, trading at $42,884.05. Ether and other altcoins also experienced declines as investors reacted to the Fed’s decision.
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