US stocks sink on Powell rate-cut caution, Trump cabinet picks
Wall Street's main indexes closed lower on Friday, with the S&P 500 and Nasdaq notching their biggest one-day losses in two weeks, on concerns about slower interest-rate cuts and as investors reacted to cabinet picks by U.S. President-elect Donald Trump.
Federal Reserve Chair Jerome Powell on Thursday cited ongoing economic growth, a solid job market, and inflation above the U.S. central bank's 2% target as reasons it can afford to be careful with the pace and scope of future rate cuts.
Traders increased bets the Fed will not change rates at its December meeting, pricing in a roughly 42% chance, versus roughly 14% a month ago, according to the CME FedWatch tool. They also dialed back expectations for easing in 2025.
This view was reinforced by Friday's economic data showing U.S. retail sales rose slightly more than expected in October. Import prices also rebounded and data released on Wednesday and Thursday showed sticky inflation.
«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,» said Adam Rich, deputy chief investment officer for Vaughan Nelson in Houston.
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