Federal Reserve Chairman Jerome Powell spoke in a Q&A session at the Economic Club in Washington, D.C, this afternoon. As expected, the market watched his remarks closely, which led to a bit of afternoon whiplash. 👀
His initial commentary around disinflation helped spark a rally in stocks. He said, “The disinflationary process, the process of getting inflation down, has begun, and it’s begun in the goods sector.” and “…but it has a long way to go. These are the very early stages of disinflation.”
However…stocks quickly reversed their rally and briefly turned negative after Powell suggested the Fed could get more hawkish. “The reality is we’re going to react to the data…So if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more than is priced in.”
Outside of that, Powell reiterated much of the same messaging we’ve heard before. After last week’s Fed meeting and rock-solid labor market data, the market is slowly adjusting its rate path expectations. As a result, the stock market was able to shake off that negative comment and close near the day’s highs. 📈
Meanwhile, in economic news, the U.S. trade deficit widened to $67.4 billion in December. The trade balance closed out 2022 with its largest yearly deficit on record ($948 billion), growing 12.2% YoY.
Also, the IBD/TIPP consumer confidence index rose to 45.1 in February. While that marks its highest reading since April 2022, readings below 50 signal an overall pessimistic vibe among consumers. 👎