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31/01/24 Briefing

US stocks tumbled on Wednesday following the Federal Reserve's decision to hold interest rates steady and Chair Jerome Powell's hint that the central bank would not begin cutting rates at its next meeting in March.

The tech-heavy Nasdaq Composite (^IXIC) fell over 2.2% on Wednesday. The benchmark S&P 500 (^GSPC) traded about 1.6% lower after slumping slightly below its record high on Tuesday. The blue-chip Dow Jones Industrial Average (^DJI), meanwhile, slumped 0.8%, or more than 300 points.

The sharp move lower marked the worst single-day performance for the S&P 500 since September.

While expecting the Fed's rate decision on Wednesday, Wall Street had been looking for clues as to when the Fed might cut rates. It got a couple of big ones: In its policy statement, the Fed noted it doesn't expect it will be appropriate to cut interest rates until it has "greater confidence" inflation is falling to 2%.

"I don't think it’s likely that the committee will reach a level of confidence" by the March meeting, Powell said at a subsequent press conference.

Stocks had already had a rough start to the day after the first batch of results from tech giants largely failed to satisfy investors.

"Magnificent Seven" names Microsoft (MSFT) and Alphabet (GOOGL, GOOG), along with chipmaker AMD (AMD), took center stage on the earnings docket Tuesday. All three stocks were hit Wednesday, with an over 7% drop from the Google parent leading the losses.

The poor start from the tech megacaps, which are expected to do much of the heavy lifting for the S&P 500 this earnings season, could unnerve Wall Street — at least until Apple (AAPL), Amazon (AMZN), and Meta (META) get their turn on Thursday.



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