BUSINESS Wall Street closes sharply lower after hawkish Fed signals


Wall Street closes sharply lower after hawkish Fed signals


06:45, December 01, 2021

Comments from the Federal Reserve chief signaling the US central bank could hike rates sooner than expected sent New York stock indices sharply lower on Tuesday.

File photo

The benchmark Dow Jones Industrial Average finished with a 1.9 percent loss at 34,483.72.

The broad-based S&P 500 also fell 1.9 percent to 4,567.00, while the tech-rich Nasdaq Composite Index lost 1.6 percent to close at 15,537.69.

In a decided shift, Fed Chair Jerome Powell told Senate lawmakers that the wave of price increases that has complicated the US pandemic recovery could last longer than anticipated, and he now advocates accelerating the drawback of the central bank's stimulus measures.

That would open the way for it to hike rates sooner than markets expected, putting an end to the rally enjoyed during the pandemic, which was fueled in part by the Fed's easy money policies.

"Today will go down as the day Fed Chair Powell shed his dovish wings and showed signs of becoming a hawk," said Edward Moya of Oanda.

Also weighing markets down were fears of the newly discovered Omicron variant of Covid-19, which investors fear could hit growth and employment, as the Delta strain did in recent months.

As the main US oil contract slumped more than five percent, energy giants took a hit, with Exxon Mobil finishing 2.8 percent lower and Chevron losing 1.7 percent.

Markets are looking ahead to employment reports out this week, including private hiring data from ADP expected on Wednesday, and the government jobs report to be released Friday.

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