US: Stocks drop at the open, still reeling from tough Powell speech

EQUITIES on Wall Street headed further into negative territory on Monday (Aug 29), still feeling the sting of the no-nonsense speech Federal Reserve Chair Jerome Powell last week.

The Fed warned of “pain” ahead for Americans in the battle against inflation, with no chance interest rates would be coming down anytime soon.

Powell “didn’t splash some cold water on the stock market’s face. He dumped a whole bucket of ice water on it and the stock market wasn’t ready for the ice-bucket challenge”, said Briefing.com analyst Patrick J O’Hare.

The blue-chip Dow on Friday lost more than 1,000 points, its worst single-day point loss since mid-May, while all 3 major indices dropped 3 per cent or more.

About 15 minutes into the trading session, the Dow Jones Industrial Average dropped 0.7 per cent to 32,055.99.

The broad-based S&P 500 fell 0.6 per cent to 4,035.3, while the tech-rich Nasdaq Composite Index shed 0.3 per cent to 12,102.38.

O’Hare said there might be a chance for bargain-hunters to come looking for buying opportunities, which could ease some of the losses.

The week will bring key items for the Fed and markets, including the all-important August employment report on Friday.

Powell and his fellow policymakers want to see signs the overly-strong labour market is cooling, which would deflate wage pressures in the economy.

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But in his speech to the annual central banking symposium in Jackson Hole, Wyoming, Powell cautioned that even with some good news on prices the Fed will continue to act “forcefully” to bring inflation from a 40-year high back to the Fed’s two per cent target, and rates will stay high for some time. AFP