US stocks stumble on revived worries over Fed

Powell speaking on TV as traders work on the floor of the New York Stock Exchange.
Powell speaking on TV as traders work on the floor of the New York Stock Exchange.PHOTO: REUTERS

NEW YORK (AFP) - Wall Street stocks stumbled Tuesday (Feb 27), reversing strong gains the last two sessions, after congressional testimony from new Federal Reserve chief Jerome Powell revived worries about higher interest rates.

The Dow Jones Industrial Average fell 1.2 per cent to finish at 25,410.03.

The broad-based S&P 500 dropped 1.3 per cent to end the day at 2,744.28, while the tech-rich Nasdaq Composite Index lost 1.2 per cent to 7,330.35.

Powell said the US economic outlook has strengthened since December, a bullish appraisal that markets took as a sign the Fed could accelerate its pace of monetary tightening, with four interest rate hikes in 2018 rather than the three that were expected.

"We still have that same haze of concerns about rising interest rates and inflation," said Art Hogan, chief market strategist at Wunderlich Securities. "Those boogeymen are still with us today."

US stocks have been volatile in recent weeks, falling sharply in early February on inflation worries, but regaining some ground more recently. The major indices rose more than one percent Monday.

Among individual shares, Comcast plunged 7.4 per cent after announcing it was offering £22 billion (S$40 billion) for Sky, outbidding Rupert Murdoch's 21st Century Fox, whose takeover ambitions have hit British government resistance. Fox shares lost 3 per cent.

Disney, which had been in line to become the ultimate owner of the Sky assets through a deal with Fox, shed 4.5 per cent amid the prospects of a bidding war.

 

Macy's department store chain rose 3.5 per cent after reporting that fourth-quarter profits nearly tripled following a strong holiday shopping season that contributed to a 1.3 per cent rise in comparable store sales.

However, other leading retailers finished the session mostly lower, with Best Buy, Target and Gap all losing at least one percent.

The drop came despite a report that US consumer confidence surged to a 17-year record in February.

Hogan said many retailers have enjoyed a strong run in recent months and were due for a pullback.