The stock market rally reversed lower Wednesday after the Federal Reserve penciled in 5.1% as the new target peak rate and Fed chief Jerome Powell demanded “substantially more evidence” that inflation is getting under control.
But stocks pared losses in whipsaw action as investors also mulled other Powell comments and hopes for even-slower rate hikes to start 2023.
The central bank hiked the fed funds rate by 50 basis points, to 4.25%-4.5% on Wednesday afternoon, as expected. But policymakers, in new quarterly projections, also now see a peak rate of 5.1%, up from 4.6% at the September Fed meeting. Fed chief Powell had stated in recent weeks that the peak rate was likely headed higher. But 5.1% was above market expectations, especially after Tuesday’s relatively tame inflation report.
So there you go.
We will see how all this gets processed and digested.
Right now it’s a sloppy trading mess.
See you in the morning.
