US markets down after Powell cools rate-cut talk
Wall Street's main indexes closed lower on Monday after Federal Reserve Chair Jerome Powell pushed back firmly against speculation that rate cuts would be imminent, while investors assessed a mixed bag of US earnings reports. In an interview aired on Sunday, Powell said more evidence on a sustainable downtrend in inflation was needed to warrant lower rates, while Minneapolis Fed President Neel Kashkari wrote in an essay published on Monday that a resilient economy could defer rate cuts for some time. "Chairman Powell threw a wet blanket over trading today, taking any chance of a March rate cut off the table," said Jack Ablin, chief investment officer at Cresset Capital in Chicago. But with all three of Wall Street's major indexes paring losses as the session wore on, Ablin said investors are likely conflicted since positive economic data supports higher rates. "Equity investors are torn between the higher rates and the stronger growth. They're no longer sure that good is bad news," he said. "Stronger growth on the economic front gives the Fed more flexibility to keep rates higher and know they're not going to kill the economy but still have a potent weapon against inflation." And since Monday's decline followed record high closing levels in the benchmark S&P 500 and the blue-chip Dow on Friday, Carol Schleif, chief investment officer at BMO family office in Minneapolis, Minnesota, saw it as a potential opportunity for investors who had been on the sidelines. "The market had gotten way out over its skis, especially coming out of November, December," Schleif said, adding that she was "not viewing this as the start of a major pullback." The Dow Jones Industrial Average fell 0.71 percent , to 38,380, the S&P 500 lost 0.32 percent, to 4,943 and the Nasdaq Composite lost 0.20 percent, to 15,598. Results were in from nearly half of the S&P 500 firms and fourth-quarter earnings estimates were improving sharply, with about 80 percent of the reports beating expectations, according to LSEG data on Friday. "Mostly earnings season has been pretty mixed bag. It's been more stock specific than industry specific," said BMO's Schleif. Estee Lauder shares surged 12 percent as the MAC lipstick maker aims to cut about 3 percent to 5 percent of its workforce. Boeing shares slipped 1.3 percent after it said a new quality glitch in some 737 MAX planes would delay some deliveries. (Reuters)