By George Glover
Federal Reserve decisions have moved markets ever since it was granted independence in 1951, but it's rare a chair's press conference triggers such a sharp selloff.
Central bank boss Jerome Powell basically killed off investor's sense of Christmas cheer Wednesday by offering up a gloomy outlook on inflation and interest rates that caused stocks to plummet.
The tech-heavy Nasdaq Composite, which plunged 3.6%, hasn't fared so badly on a Fed decision day since March 2001, according to Dow Jones Market Data. On that occasion, policymakers voted to slash interest rates by half a point in a bid to revive the faltering U.S. economy, disappointing investors who were hoping for an even more aggressive cut.
The S&P 500 and Dow Jones Industrial Average had their worst such sessions since January 2009 and March 2020, respectively. The small-cap Russell 2000 dropped 4.4% for its worst Fed decision day on record.
Those aren't the only data points that capture the sense of carnage. Wall Street's best-known gauge of fear and uncertainty, the Cboe Volatility Index (VIX), spiked 74% for its largest increase since February 2018 -- a bizarre session when anxieties about inflation snowballed into a panic selloff that caused the Dow to plunge 1,200 points.
Meanwhile, just 17 S&P 500 stocks finished Wednesday in the green, the lowest number of large-cap winners since March 2023.
None of that means it's time to panic -- stocks were rising on Thursday, suggesting that investors have already come to terms with the idea that the Fed might not cut interest rates much next year with inflation running above its 2% target.
But it's still clear that Powell's press conference was one for the ages.
Write to George Glover at george.glover@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 19, 2024 08:00 ET (13:00 GMT)
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