US stocks opened lower on Friday after Fed Chair Jerome Powell prepared investors for bigger interest rate hikes ahead.
“I would say 50 basis points will be on the table for the May meeting,” Powell said at an IMF debate on Thursday.
Meanwhile, first-quarter results continue to beat revenue and profit estimates.
US stocks opened lower on Friday as investors grapple with new comments from Fed Chair Jerome Powell that indicate bigger interest rate hikes ahead.
“I would say 50 basis points will be on the table for the May meeting,” Powell said at an IMF debate on Thursday, as the Fed struggles to contain an inflationary rate that has surged to 40-year highs in recent months.
Powell’s warming to the idea of a 50-basis-point rate hike at its next meeting in May has some analysts now calling for a 75-basis-point increase. “75bps is the new 25bps,” Bank of America said in a Friday note, arguing that an interest rate shock is likely.
For the week, the S&P 500 is down 0.6%, while the Dow is up 0.2% and the Nasdaq is down 1.7%, heading for its third straight weekly drop.
Here’s where US indexes stood shortly after the 9:30 a.m. ET open on Friday:
First-quarter corporate earnings continue to beat analyst estimates on both the top and bottom lines. According to data from Fundstrat, of the 95 companies that have reported so far, or 19% of the S&P 500, results are beating profit estimates by a median of 6%. Meanwhile, revenue estimates have been beating by a median of 3%.
Demand for oil in China is on pace to slide 20% this month, the biggest shock since the early days of COVID, according to a Bloomberg report. The decline is the equivalent to a drop in crude oil consumption of 1.2 million barrels a day.