Powell sparks market carnage: VIX surges 58%, stocks tumble, dollar hits 2-year high, Bitcoin tumbles – Amazon.com (NASDAQ: AMZN)

Fed Chairman Jerome PowellI took a hawkish stance at Wednesday’s press conference after the December Fed meeting, sparking market carnage at the close of the New York session.

While the Fed cut interest rates by 0.25% to a range of 4.25%-4.5%, as widely expected, the latest economic forecasts suggest there may only be two rate cuts in 2025 – down from the four forecast in September , which is also less than the three times predicted in 2025.

Powell described the shift as a “new phase” in monetary policy and emphasized that after a 100 basis point rate cut in 2024, interest rates are now significantly closer to a neutral stance.

Stocks plunge across the board, dollar surges to two-year high Bitcoin Bitcoin/USD Stocks fell more than 5% as investors digested the reality of the Fed’s shift in monetary policy stance.

The CBOE Volatility Index, known as the VIX and Wall Street’s fear gauge, surged 58% to 25, reflecting a surge in investor uncertainty and growing anxiety about the future of interest rates.

Wall Street takes a beating: Major indexes suffer big losses

The Dow Jones Industrial Average, composed of SPDR Dow Jones Industrial Average ETF DIAIt fell 1,123 points, or 2.6%, to close at 42,326 points, the largest single-day drop since September 2022. amazon.com Amazon Blue-chip stocks were the worst performers, falling 4.6%.

S&P 500 Index — powered by SPDR S&P 500 ETF Trust spy — Down 178 points, or 2.9%, to 5,872, its worst day since September 2022. Paycom Software Company PAYC It was a major laggard among the S&P 500, down 10%.

The Nasdaq 100 index, which is dominated by technology stocks, consists of Invesco QQQ Trust, Series 1 QQThe stock fell even further, down 3.6% to 21,209 points, as interest rate-sensitive technology stocks took a hit. Tesla Inc. Tesla It fell 8.1%, the worst performance among the Nasdaq 100 index.

All companies in the Big Seven ended in the red, with more than $600 billion wiped from market value combined on Wednesday.

Small-cap stocks in the Russell 2000 index were the biggest losers, plunging 4.7% to 2,225 shares. With Wednesday’s move, iShares Russell 2000 ETF IWM Post-election backlash is completely eliminated.

All major U.S. equity sectors posted losses.

Consumer discretionary stocks were the biggest losers, down 4.5%, followed by real estate stocks, which fell 4% as rising interest rates weighed heavily on growth and rate-sensitive industries.

The largest technology sector by market value fell 3.2%, with chipmakers and software companies bearing the brunt.

The communications and materials sectors both fell 2.9%, and the financial sector fell 3%, reflecting pressure on cyclical areas of the market.

Even traditional defensive sectors haven’t escaped the sell-off. Utilities and consumer staples fell 2.4% and 1.5% respectively.

Dollar surges to two-year high, pummeling gold and Bitcoin

The U.S. dollar emerged as the clear winner on the day, with the U.S. Dollar Index (DXY) not far behind. Invesco DB U.S. Dollar Index Bullish Fund ETF Youpuup 1.2%, reaching its highest level since November 2022.

As the dollar rose, gold failed to provide a safe haven, falling 2.1% to $2,580 an ounce, while silver fell 3.5%.

Risk aversion extends to alternative assets. Bitcoin plunged 5.5%, trading just above $101,500.

At the press conference, Powell was asked whether the U.S. government should consider establishing a strategic reserve of Bitcoin. Powell quickly dismissed the idea and made clear that such a move was not on the Fed’s radar.

“We are not allowed to own Bitcoin,” Powell said, emphasizing the Fed’s legal and structural constraints. “The Fed Act dictates what we can have, and we are not seeking any changes to that law.”

Read next:

Use AI to generate illustrations through Dall-E.