Stock Market Today: Indexes Drop as Fed Rate Cuts are still underway

Key points:

1. Indexes edged lower on Thursday as traders focused on comments from Fed Chair Jerome Powell.

2. Powell emphasized that the Fed is not in a rush to cut rates and reaffirmed the strength of the U.S. economy.

3. Meanwhile, traders also processed wholesale inflation data, which came in as expected.

Stock market today: Indexes dipped on Thursday as traders focused on comments from Fed Chair Jerome Powell. Powell stated that the Fed is not rushing to lower rates and reiterated the strength of the U.S. economy. Investors also analyzed wholesale inflation data, which came in as anticipated.

The S&P 500 and Nasdaq fell more than 0.5%, while the Dow Jones Industrial Average lost over 200 points. The 10-year Treasury yield, meanwhile, remained nearly flat at 4.447%, hovering close to its highest level since July.

Stocks Fall as Powell Signals No Rush to Cut Rates

The decline followed remarks from Fed Chair Jerome Powell, who signaled that the central bank is in no rush to cut interest rates as the U.S. economy remains on solid ground.

"The economy is not signaling that we need to hurry to lower rates," Powell said in prepared remarks at an event in Dallas. "The strength we’re seeing in the economy allows us to approach our decisions with caution."

Powell also highlighted that the U.S. has experienced the strongest domestic growth of any major economy and emphasized the resilience of the labor market. He noted that the slowdown in job growth seen in the October jobs report was primarily due to storm-related disruptions.

Powell’s Remarks Fuel Fed Easing Speculation

Powell's remarks come as investors look for clues about the Fed's future easing plans following last week's 25 basis point rate cut. Meanwhile, concerns over inflation have intensified in the wake of Donald Trump's election victory, as his proposed tariffs and mass deportations could push inflation higher, potentially prompting the Fed to pause rate hikes, according to economists.

Traders are pricing in an additional 25 basis point cut at the Fed's December meeting, with expectations for a pause in January, based on data from the CME FedWatch tool.

Powell's comments also come after the latest inflation data, which showed wholesale prices rose 0.2% in October, according to the Bureau of Labor Statistics. While the data met expectations, it also indicated that inflation remains persistent, with a year-over-year increase of 2.4%.

The core producer price index, which excludes food and energy, rose 0.3% for the month and 3.1% year-over-year.

Additionally, Thursday's jobless claims data revealed a drop to the lowest level since May, with claims falling to 217,000 last week—a decrease of 4,000 from the previous week.

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