WASHINGTON, Jan 27 ― US stocks retreated yesterday, erasing strong gains, after the Federal Reserve signalled an interest rate hike could be coming soon, while supply concerns stemming from tension between Russia and Ukraine saw oil prices touch highs not seen since 2014.
The Dow Jones Industrial Average closed down 0.38 per cent, while the S&P 500 fell 0.15 per cent and the Nasdaq Composite gained just 0.02 per cent.In its latest policy update, the Fed signalled it is likely to raise US interest rates in March and reaffirmed plans to end its bond purchases that month before launching a significant reduction in its asset holdings.
“The market took notice of the stress the Fed Chair put on the inflation side of the equation combined with his stressing of the tight labour market. This implies that the Fed could be comfortable with some reduction in the pace of overall economic growth,” said Russell Price, chief economist at Ameriprise Financial Services.
US Treasury yields rose as the Fed issued its update. The US Treasury 2-year yields hit their highest level since February 2020. The benchmark US 10-year yield climbed to 1.8709 per cent shortly after the Fed statement.
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