Wall St slides after Powell backs aggressive rate hike views

(Reuters) – Wall Street’s three main indexes fell on Thursday after Federal Reserve Chair Jerome Powell said a 50-basis point interest rate hike was “on the table”, cementing expectations of aggressive policy tightening by the U.S. central bank.

FILE PHOTO: A Wall Street sign is pictured outside the New York Stock Exchange in the Manhattan borough of New York City, New York, U.S., April 16, 2021. REUTERS/Carlo Allegri/File Photo

With inflation running roughly three times the Fed’s 2% target, “it is appropriate to be moving a little more quickly,” Powell said in a discussion of the global economy at the meetings of the International Monetary Fund. “50 basis points will be on the table for the May meeting.”

High-growth stocks including those of Alphabet Inc and Amazon.com Inc fell close to 2% each after yields on two-year bonds, the most sensitive to interest changes, hit their highest in three years. [US/]

“The market is starting to reprice risk and the way you’re seeing that is obviously higher value stocks are getting hit the hardest,” said Dennis Dick, a professional stock trader at Bright Trading LLC in Las Vegas.

All the three major indexes opened higher, boosted by strong results from heavyweight Tesla and airline operators, but gave up gains by afternoon trading.

At 1:55 p.m. ET, the Dow Jones Industrial Average was down 54.61 points, or 0.16%, at 35,106.18, the S&P 500 was down 24.74 points, or 0.55%, at 4,434.71, and the Nasdaq Composite was down 127.42 points, or 0.95%, at 13,325.65.

Tesla, the world’s most valuable automaker, rose 5.8% after its results beat Wall Street expectations as higher prices helped it overcome supply-chain chaos and rising costs.

United Airlines Holdings Inc and American Airlines Group Inc climbed 11.5% and 5.6%, respectively, after they predicted a return to profit in the current quarter due to booming travel demand.

Overall, analysts expect S&P 500 earnings growth of 7.3% in the first quarter, compared with the 32.1% rise in the fourth quarter, according to Refinitiv data.

Declining issues outnumbered advancers for a 2.36-to-1 ratio on the NYSE and a 2.43-to-1 ratio on the Nasdaq.

The S&P index recorded 76 new 52-week highs and 12 new lows, while the Nasdaq recorded 66 new highs and 283 new lows.

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