The S&P 500 is at the lows of the day, down 21 poitns to 7709 in a reversal from the initial Fed reaction.
There is a rumor going around that Warsh repeatedly referenced ‘hikes’ in his text to mess with the algos, but he only talked about physical hikes in the area. Perhaps that led to some kind of strange reaction but I tend to think that market participants piled into Nasdaq stocks initally despite the hawkish talk. The thinking there is from the last cycle where rate hikes didn’t hurt tech stocks because of low debt levels at tech companies. I don’t think that’s the case any longer with a $3 trillion AI buildout but the market is like a trained monkey.
Or at least it was for a time as tech is now lagging alongside utilities (which is what you would expect with yields rising).
I also think that some month-end flows might be mixed in with whatever is happening but the move in equities now matches the hawkish reaction elsewhere that’s led to:
- Gold lower
- USD higher
- Treasury yields higher
In fact, those moves are all extending at the moment. Next we shift to data again with ISM manufacturing and JOLTS on Tursday, ADP Wednesday, ISM services Thursday and non-farm payrolls on Friday.
This article was written by Adam Button at investinglive.com.