Traders work on the floor of the New York Stock Exchange during morning trading on May 17, 2023 in New York City.
Michael M. Santiago | Getty Images
Stocks slid modestly on Thursday as Wall Street parsed commentary from Federal Reserve Chair Jerome Powell while monitoring a key milestone for a closely followed bond yield.
The S&P 500 and Nasdaq Composite lost 0.1% and 0.2%, respectively. The Dow Jones Industrial Average shed 16 points, or 0.1%
Powell said inflation was still too high and would likely require lower economic growth, while also noting recent data showed progress toward slowing prices. He also said that monetary policy was not yet too tight.
“Incoming data over recent months show ongoing progress toward both of our dual mandate goals —maximum employment and stable prices,” Powell said.
But, “in any case, inflation is still too high,” he said. “A few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal.”
Investors appeared to take away that the Fed would likely kept interest rates unmoved atleast at its next policy meeting. The market is pricing in a 99% chance that the central bank leaves rates unchanged on Thursday, up from about 93% a day prior, according to CME Group’s FedWatch tool.
“While Powell’s language kept the possibility of further rate hikes available, markets reflected an increased probability of no further rate hikes,” said Michelle Cluver, portfolio strategist at Global X. “This supportive commentary and encouraging statements about the state of the economy were balanced against the fact that the Fed remains data dependent and the potential for higher for longer yields.”
But the benchmark U.S. 10-year Treasury yield notched a high of 4.996% on Thursday, inching closer to the well-followed 5% level that was last crossed in 2007. After Powell’s remarks were released, the yield hovered near that high.
Traders also parsed the latest earnings reports. More than 15% of companies in the S&P 500 have already reported this earnings season, according to FactSet. Of those, more than 74% have surpassed Wall Street expectations.
Electric vehicle juggernaut Tesla slid more than 9% after the company missed analyst expectations on earnings and revenue in the third quarter. CEO Elon Musk also warned that the company’s Cybertruck will not produce much positive cash flow more than a year after production starts.
Netflix shares, on the other hand, jumped more than 16% after the streaming giant posted third-quarter earnings that beat estimates. The company got a boost from strong ad-tier subscriptions.
Beyond technology stocks, AT&T climbed more than 6% after beating expectations for the third quarter, while investment firm Blackstone slid 6% on a weaker-than-expected report.
— CNBC’s Jeff Cox and Gina Francolla contributed to this report.
Correction: LSEG is formerly known as Refinitiv. An earlier version misstated the company’s previous name.