TECH - Markets Believe The Fed Got It Wrong: Rate Cut Reluctance Rattles Investors | Benzinga
Technology stocks, consumer goods and small caps faced the steepest downturns after the Federal Reserve dialed back on expectations for interest rate cuts in early 2024.
U.S. equity markets closed sharply lower on Wednesday, following the Fed’s message to markets: don’t expect a rate cut in March.
Although stocks were making something of a recovery on Thursday, on Wednesday the S&P 500 shed 1.6%, the tech-heavy Nasdaq lost 2.2% and the Russell 2000 index of small cap stocks fell 2.5%.
Looking at the highly-popular exchange traded funds that mirror the performances of these indexes, and it was the same story: the SPDR S&P 500 ETF (NYSE:SPY) fell 1.6%, the Invesco QQQ Trust (NYSE:QQQ) lost 2% and the iShares Russell 2000 ETF (NYSE:IWM) shed 2.5%.
On Thursday, most indicators, including those from rate and money markets, suggested a decreased likelihood of an interest rate cut in March.
These also included the CME Group’s FedWatch Tool, which showed the probability of a quarter-point rate cut at the Fed’s March meeting is 44.5%, down from 52.8% on Wednesday before the Fed meeting, and down from 73.4% a month ago.