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Stock indexes retreated as investors digested Thursday’s comments from Federal Reserve Chairman Jerome Powell.
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The odds of a 25 basis point rate cut in December fell sharply after Powell’s speech.
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Bond yields also rose following the comments and amid signs of economic strength.
U.S. stocks plunged on Friday morning as Wall Street dropped expectations for rate cuts by December.
The tapering began Thursday afternoon after Federal Reserve Chair Jerome Powell indicated the central bank will take its time easing policy, citing the current U.S. economic strength.
“The economy is not sending any signal that we should be in a rush to lower rates,” he said.
The odds of a 25 basis point rate cut fell to below 60% shortly after Powell’s comments, down from 80%, as calculated by the CME FedWatch tool. The probability remained lower, around 58%, as of Friday morning.
Also influencing rate cut expectations is a run of encouraging economic data. New figures on Friday showed that U.S. retail sales advanced in October, boosted by a surge in auto purchases.
As the three major indexes headed for their first losing week since the election, bond yields rose. The 2-year yield, the most sensitive to short-term rate forecasts, has risen 7 basis points in the past two days.
Here’s where the US indices stood shortly after the 9:30 a.m. opening bell on Friday:
Here’s what else is happening:
In commodities, bonds and cryptocurrencies:
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Oil markets fell. West Texas Intermediate crude oil fell 0.96% to $68.04 a barrel. Brent crude oil, the international benchmark, fell 0.94% to $71.88 a barrel.
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Gold was virtually stable at $2,572 an ounce.
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The 10-year Treasury bond rose 4 basis points to 4.459%.
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Bitcoin jumped 2.28% to $90,053.
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