The Dow tumbled 500 points because Jerome Powell's Fed 'isn't going to blink' - MarketWatch

stock indexes finished sharply lower after swinging between gains and losses after the Fed raised the fed-funds rate by 75 basis points to a target range of 3% to 3.25%.

Central bankers also penciled in another 125 basis points in rate hikes by year end, which would bring the benchmark interest rate to a midpoint of 4.4% by the end of the year, plus a “terminal” rate — or peak — at 4.6% in 2023.

Analysts said the projections and Powell’s comments drove home the same message that the Fed chair delivered in a speech at a monetary policy symposium in Jackson Hole, Wyoming, in late August: the Fed intends to keep tightening until it gets inflation under control.

“He’s clearly intent on showing the market that he means what he says, that he’s not going to blink,” said Mel Casey, senior portfolio manager at FBB Capital Partners, in a phone interview?

“We will keep at it until the job is done,” Powell said in a news conference after the release of the Fed’s policy statement and the economic projections.

The August consumer price index report released earlier this month found inflation had spread more broadly through the economy, with the year-over-year rate slowing less than expected to 8.3%.

In his Jackson Hole speech, Powell warned that the economy and household would experience “some pain” as a result of the bank’s more aggressive effort to roll back inflation.

“I believe they’re doing what is to be done,” said Guido Petrelli, founder and CEO of Merlin Investor.

“What I don’t see as a good sign from the meeting is that they postponed the time when inflation is going to peak, so everything has been prolonged.”

“We’re trying to get to acceptance,” he said, after bouts of “hopefulness” that have emerged during market bounces earlier this year, particularly as the S&P 500 rallied around 17% off its June low ahead of Powell’s Jackson Hole speech. 

“No one knows whether this process will lead to a recession or if so how significant that recession would be,” Powell said in the news conference

“We had a lot of rate increases, and we’ve done really fast in the last three meetings,” he said

Monday, the car maker said a lack of parts and inflation would leave it with a third-quarter operating profit much lower than Wall Street expected