Market Rally Stalls as Investors Shift Focus to Rate Path Trajectory

Barry Adams
22 Jun, 2023
New York City

Stocks continued to slide for the fourth day in a row and third day this week on persistent rate path worries and looming economic slowdown. 

Major averages turned lower a day after Federal Reserve Chairman Powell stressed the need to continue the central bank's monetary tightening after last week's rate pause. 

Chairman Powell is set to offer his views on the economy in his Semiannual Monetary Policy Report to the U.S. Senate Banking Committee on Thursday. 

Investors are looking forward to hearing Powell's view on interest rates and inflation. 

In other economic news, initial claims of jobless benefits for the week ending on June 17 were unchanged at 264,000 and continuing claims declined to 1.759 million. 

Across Europe, central banks lifted rates and held out for more rate hikes in the remainder of the year. 

The Bank of England lifted its policy rate by higher-than-expected 50 basis points to 5% to tackle inflation hovering at 8.7%. 

The Norges Bank lifted its key lending rate by 50 basis points to 3.75% and the Swiss National Bank slowed its rate hike by 25 basis points to 1.75%. 

Turkey also lifted its rate by a whopping 8.5% to 15% in a policy U-turn as the nation battles 40% inflation rate. 

 

U.S. Indexes & Yields 

The S&P 500 index futures decreased 0.3% to 4,355.13 and the Nasdaq Composite futures declined 0.4% to 13,532.17.

The yield on 2-year Treasury notes increased to 4.73%, 10-year Treasury notes inched lower to 3.71% and 30-year Treasury bonds edged down to 3.83%. 

Crude oil decreased $1.46 to $71.07 a barrel and natural gas prices increased 1 cent to $2.60 a thermal unit. 

 

U.S. Stock Movers

Darden Restaurants, Inc declined 3.8% to $160.0 after the parent of Olive Garden and Longhorn Steakhouse reported better-than-expected quarterly results but forecasted mixed annual outlook. 

Overstock.com Inc increased 7% to $22.66 after the company acquired digital assets and intellectual property of Bed Bath & Beyond at the floor price of $21.5 million in an auction. 

Spirit AeroSystems Holdings Inc dropped 9.2% to $26.95 after the company stopped production at its Kansas plant following workers voting to strike from Saturday. 

Spirit is one of the key parts suppliers to aviation company Boeing. 

Boeing Co declined 2.7% to $206.25 following the strike news Spirit AeroSystems.