The Fed continues with the rate hikes and suggests that it has no plans of slowing down in the future. Dollar and oil gain from other risk assets falling.

The indexes fell rapidly in today’s session as Fed chairman Jerome Powell put a stop to the investors hopes after the central bank lifted rates for the fourth consecutive time.

The Dow Jones dropped 1.6%, Nasdaq fell 3.4% and the S&P 500 was down 2.5%.

The Federal Reserve increased its interest rate by 75 basis points and suggested that future increases will face a higher threshold. But the chairman pushed back against the idea of a ‘pause’.

He stated, “it is very premature to be thinking about pausing”. Mr Powell also mentioned that the Fed is not as close to the end of its tightening cycle as others had expected, stating that the “ultimate level of interest rates will be higher than previously estimated (in September)”. As a result of this, treasury yields turned positive adding pressure on rate-sensitive sectors. Especially tech.

The US dollar benefited from the Fed’s decision as it regained some strength against other currencies in today’s session. Initially the euro rose versus the dollar but then retreated, down 0.5%. The pound edged lower too, down 0.82% around 20:45 GMT.

Additionally, oil also gained ground as other risk assets fell following the interest rate hike. The market was supported by a further decline is US oil inventories as refineries are becoming busier ahead of the winter heating season. Brent crude was up 1.6% while West Texas was up 1.8%.

US employers added more jobs than expected, showing more signs of resilience of the economy. The latest ADP report showed an unexpected increase to 239,00 in October, compared to the expected forecast fall to 185,000. “This is a really strong number given the maturity of the economic recovery but the hiring was not broad-based”, said ADP chief economist Nela Richardson.

Reported earnings:

• CVS Health Corp beat expectations as it reported an EPS of $2.09 with revenue of $81.16 billion.
• Qualcomm earnings per share was missed by 2 cents coming in at $3.13 a share, but revenue was slightly up coming in at $11.39 billion.
• Estee Lauder reported earnings of $1.43 a share beating expectations, but revenue came in at $3.93 billion which is lower than estimates.
• Ferrari NV beat analysts forecasts as it reported earnings of $1.23 a share on revenue of $1.25 billion.

(Sources: investing.com, reuters.com, cnbc.com)