Powell Suggests Potentially More Aggressive Rate Hikes Ahead

Wall Street dropped on Tuesday

Yesterday was a negative day for the US stock market. 

The S&P 500 finished at -1.53%, the Nasdaq ended the trading session at -1.25% and the Dow Jones closed at -1.72%.

The negative movement has been driven by the Federal Reserve’s president’s speech about monetary policy.

The investors’ sentiment remains neutral, as indicated in the graph below:

Sentiment indicator – Fear & Greed Index

The market sentiment is 47, in “Neutral” mode.

Powell’s hawkish speech

Yesterday, we heard from the Federal Reserve President, during his semiannual Congressional testimony.

Chairman, Jerome Powell said the Federal Reserve could lift interest rates higher and potentially faster than previously predicted, given the recent strong economic data.

The last Fed meeting was on 1 February and the interest rate was increased by 0.25%, slowing down the pace of interest rate hikes of 0.50% in December and 75 basis points in November.

The majority of investors are now expecting the Federal Reserve to accelerate the rate hikes, again, at the next meeting on 22 March.

As shown in the graph below, 70.5% of investors believe in a 0.5% rate increase while the remaining 29.5% are expecting a rate hike of 0.25%.

The data reported today, after the hawkish speech of Jerome Powell yesterday, is completely the opposite scenario of one week ago.

The size of the next rate increase, however, will be influenced by Labour Department reports on unemployment and inflation.

What to watch today

U.S. ADP Nonfarm Employment Change will be released today at 13:15 GMT.

Jerome Powell will continue his testimony at Capitol Hill today at 15:00 GMT.

Markets will continue to be volatile today, due to these events.

Portfolio update

I am currently neutral and cautious about the stock market.

I hold long and short stock positions and aim to profit regardless of the market direction.

If you are already copying my portfolio, please keep the copy open.

If you are thinking of copying me, now could be the right time, if you can invest for the long term (years).

Remember to copy the open trades to optimize the copy.

Remember to set the stop loss on the copy at the minimum level, so you don’t get stopped if there is a correction.

Thank you, everyone. Have a nice day!

Steps to follow to copy my portfolio automatically:

1. Create an eToro account here: https://federicamontella.com/go/etoro/

2. Verify your account and make a deposit of at least 200 USD (you can deposit in any currency, like GBP and EUR)

3. Go to my profile page: https://federicamontella.com/go/etoro-passionforprofit/

4. Start the copy (copy open trades and set the lowest stop loss possible, to allow some movement)

5. Enjoy, it’s all automatic. You will make passive income 24/7

Let me know if you have any questions.

 

Federica Montella

eToro Popular Investor

 

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Author: Federica Montella
eToro Popular Investor, food lover and blogger. Stock trader and Popular Investor at eToro. I am on a mission to find the best restaurants and food to eat.