- Fed’s Caution: Powell’s speech dampens hopes for aggressive rate cuts, contributing to investor unease.
- Trump‘s Cabinet Picks: Nomination of Robert F. Kennedy Jr. sparks volatility, affecting healthcare and consumer sectors.
- Sector Impact: Tech, semiconductors, and defense stocks face significant losses amid rising uncertainty.
Wall Street ended the week on a downbeat note, with major indexes suffering their largest one-day declines in two weeks. The sell-off was driven by heightened concerns about slower interest rate cuts, following Federal Reserve Chairman Jerome Powell’s cautious comments on Thursday.
Powell emphasized the strength of the U.S. economy, highlighting continued growth, low unemployment, and inflation above the Fed’s 2% target, suggesting that the pace of rate cuts could be slower than expected.
Wall Street Tumbles as Fed Slows Rate-Cut Bets and Trump’s Picks Stir Market Nerves
In addition to Powell’s remarks, investors were rattled by the latest cabinet picks announced by President-elect Donald Trump. His decision to nominate Robert F. Kennedy Jr. for Health and Human Services sparked a sharp sell-off in vaccine and food companies. Kennedy’s stance on vaccines and processed foods raised questions about potential regulatory changes in the health sector, which contributed to the market’s nervousness.
Friday’s market activity saw significant losses in the tech sector, with semiconductor stocks being hit particularly hard. Applied Materials saw a dramatic 9.2% drop after forecasting disappointing revenue, while the Philadelphia Semiconductor Index fell 3.4%. In the broader market, healthcare stocks such as Moderna and Pfizer also suffered, weighed down by the uncertainty surrounding Trump’s health-related policies.
On top of the market’s fundamental concerns, the expiration of stock and index options added further volatility. The CBOE Volatility Index (VIX), often seen as a barometer of market fear, spiked briefly above 17 before closing lower, signaling heightened investor anxiety. Despite strong earnings earlier in the week, the combination of external political and economic pressures led to a more cautious market environment.
The significant pullback in U.S. stocks reflects a mix of economic and political uncertainties, with the Fed’s cautious approach to rate cuts and concerns about Trump’s cabinet picks both contributing to investor unease.
“In the last 48 hours we’ve had some pretty big changes, not just from the election but from economic data that was better than expected and Powell speaking about not having to be as aggressive on interest rate cuts.” – Adam Rich, Deputy Chief Investment Officer at Vaughan Nelson
