Fed Chair Powell's Remarks Sour Market Sentiments

Fed Chair Jerome Powell indicated no rush for rate cuts, leading Wall Street to close lower. The probability of a December rate cut dropped significantly, triggering market uncertainty. Despite ongoing inflation challenges, economic indicators like jobs remain strong. Defense stocks saw declines while Walt Disney propped up the Dow.

Thursday saw a downturn in Wall Street's major indexes as Federal Reserve Chair Jerome Powell shunned rapid rate cuts. Speaking at a Dallas Fed event, Powell cited the economy's resilience, a robust job market, and persistent inflation as reasons for a cautious approach to monetary policy adjustments.

Market predictions for a 25-basis point rate cut in December dwindled, dropping to 55.5% from Wednesday's 82.5%, according to the CME FedWatch tool. Adam Hetts from Janus Henderson Investors noted Powell's comments as dampening the previously optimistic outlook for rate cuts.

Economic data for the day echoed inflation concerns, with the producer price index rising slightly above expectations. Despite this, labor metrics showed strength, with jobless claims lower than forecast. In market moves, defense stocks pulled down the industrial sector, while Walt Disney boosted the Dow with its earnings report.

(With inputs from agencies.)