- Equities in the United States fell on Wednesday as Federal Reserve Chair Jerome Powell reiterated the central bank's hawkish messaging at the start of his two-day semi-annual testimony before Congress.
- The S&P 500 Index fell 0.5% for the third day in a row. Five of the 11 major industry sectors were in the red, with information and communication services faring the worst. The Nasdaq 100 Index fell 1.4%, while the Dow Jones Industrial Average fell 0.3%.
- Powell stated that policymakers expect interest rates to rise in order to reduce US growth below its long-term trend and to contain price pressures, with the timing of future increases dependent on incoming data.
- Investors are still concerned following last week's pause in interest-rate hikes, as Fed officials continue to signal that further increases are still possible.
- The second-quarter stock rally appears to be fading as crowded bullish positioning, high valuations, and pricing of a growth forecast that is more optimistic than estimates weigh on investor sentiment. According to Goldman Sachs, the main reasons for funds to consider hedging their S&P 500 exposure are attractive alternatives to equities.
