Stocks crater as Federal Reserve’s inflation concern swells
The S&P 500 fell 3% — its second-worst day of 2024. The Nasdaq 100 slumped 3.6% and the Russell 2000 cratered 4.4%, its biggest loss this year.
The Invesco S&P 500 Equal Weight ETF closed below its November 5 level, erasing all of its postelection gains, as did small caps.
Day 13 in a row of breadth is bad, but this time even worse: the S&P 500’s advance-decline line was extremely negative. The number of falling stocks outnumbered those that rose by 464, the lowest reading this year.
The options market thought this would be the sleepiest Federal Reserve meeting of the year, and boy was it wrong. The S&P 500 and Russell 2000 were comfortably in the green ahead of the central bank’s rate decision. The Fed’s projections showed heightened concern about inflation risk given recent readings that have surprised to the upside as well as potential policies that might be pursued by the incoming Trump administration.
The median monetary policymaker thinks two interest-rate cuts would be appropriate in 2025; the market swung even more dramatically and now is pricing in only one 25-basis point reduction.
Some lowlights among individual stocks: Tesla fell 8.3%, Broadcom retreated by 6.9%, and GameStop was down 8.5%.
Jabil Circuit managed to book a strong 7.3% gain on the heels of its quarterly results and upgraded sales forecast.
Quantum Computing was one of the other rare Fed-proof stocks out there: shares were up about 40% heading into the announcement, and finished even higher than that.
