Powell Pushes Back on Hikes

He was not as hawkish as feared

Highlights

• Powell was not as hawkish as feared

• Is the U.S. economy as great as believed?

• Consumers continue to reject higher prices

• AI legislation is a risk that we’re not sure is priced in

While We Were Sleeping

“I don’t see the stag, or the ‘flation.”

Jay Powell, May 1st, 2024

Well, that was one big rollover yesterday heading into the close after the stock market ripped through most of the Powell press conference. Here were the moves among the major averages from the intraday highs to the close… not a pretty picture:

• S&P 500: -1.5% (-77 pts)

• Nasdaq: -2.0% (-320 pts)

• Dow: -1.2% (-445 pts)

We couldn’t help but notice that the Nasdaq 100 finished a 13th session in a row below its 50-day moving average. This is the longest such stretch since the 17-day period from September 15th to October 9th of last year. The Nasdaq Composite also closed Wednesday with its 13th straight session below a flattened-out 50-day trendline (not good). And the Dow made it 17 straight days beneath its own 50-day trendline. If you think it was a rough ride for equities, crude oil futures got whacked really hard, with the near-term expiring contract sinking -3.6% to $79 per barrel — on track for the third drop in four weeks and entering correction mode (-9%) from the early April-peak of $86.91. Tack on natural gas futures getting hammered -3% to $1.93 per MMBtu and gasoline futures slumping -4.2% to $2.57 per gallon. Good day for those of us not beating to the drum of the inflationists.