US shares abandon earlier gains on Fed official’s remarks

More pain for equities seems to constitute a new status quo. Wall Street’s main indexes sank deeper Tuesday after earlier rally in stocks on positive economic data. The latest retreat comes after Fed policymakers defended more interest rate hikes even at the risk of slowing economic growth.

The benchmark S&P 500 erased its gains of up to 1.7% by early afternoon trading to hit November 2020’s lows, while investors are more worried about how much further stocks would have to fall before stabilizing.

The S&P 500 traded 0.7% lower, breaking below the previous bear market intraday low of 3,636 that was set in mid-June. The Dow Jones Industrial Average was last down 200 points, or 0.6%, giving up an earlier gain of nearly 400 points. The Nasdaq Composite lost 0.4%. The S&P 500 is now 24.7% below its record set in January, while the Dow is 21.4% below its all-time high. The Nasdaq has fallen more than 33% since hitting a record in November.

St. Louis Fed President James Bullard made a case for more rate hikes, while Chicago Fed President Charles Evans said the central bank will need to raise rates by at least another percentage point this year.

Analysts at Wells Fargo believe the US central bank taking its target range for the Fed funds rate to 4.75%-5.00% by the first quarter of 2023.

This is a continuation of Jerome Powell’s stance in and trying to really let markets, investors and the world know that policymakers are going to continue hiking rates within the fight against inflation.