S&P 500 slides over comments by Fed’s Powell

The S&P 500 erased previous daily gains and dropped 0.12%, settling at 4,544.36, shortly after Fed’s Chair Jerome Powell had admitted that the central bank keeps monitoring price pressures carefully and would act as required.

As the S&P500 cash market opened, the market mood was upbeat, with the three major U. S. equity indices, the S&P 500, the Dow Jones Industrial, and the Nasdaq, were in the green zone. As Powell began his speech, conditions changed.

Indices record losses between 0.23% and 0.98%, except for the Dow Jones Industrial, up 0.18%. The sectors of the $&P 500 which lose the most are the communications followed by construction, recording losses of 2.61% and 0.46%, respectively.

Winners, on Friday, are financial stocks up by 1.27% and real estate gaining 0.74%, which lie on the back of higher U. S. Treasury yields.

Jerome Powell said he is concerned about higher inflation and added that the central bank would monitor for signals that households and businesses are expecting sustained upward price pressures.

Powell added that the Fed is on track to begin tapering asset purchases, and if the economy evolves as Fed expected, it will be completed by the first half of 2022. He reiterated that although he favors the timing of the QE reduction, he added, “I don’t think it is time to raise rates”.