By Yasin Ebrahim
Investing.com – The S&P 500 fell sharply Thursday after a Federal Reserve official stoked fears of aggressive rate hike action from the central bank, sending Treasury yields soaring just as data showed inflation climbed to multi-decade highs.
The S&P 500 fell 1.9%, the Dow Jones Industrial Average slipped 1.5%, or 538 points, the Nasdaq fell 2.2%.
St. Louis Fed President James Bullard threw his weight behind the idea of the Fed hiking rates 1% by July, after consumer price inflation that jumped by a more than expected 7.5% for the 12 months through January.
“I’d like to see 100 basis points in the bag by July 1,” Bullard said in an interview with Bloomberg. “I was already more hawkish but I have pulled up dramatically what I think the committee should do."
Bullard also suggested that he would be in favor of the Fed hiking rates in-between meetings, which caught the market by surprise as it “signals that maybe the Fed is becoming more worried about inflation,” Melissa Brown, managing director of applied research at Qontigo, an index and analytics provider, said in an interview with Investing.com on Thursday.
“The quarter point increase was certainly priced into markets, with Fed futures market implying about a 90% probability recently, but , I'm not sure that half point or more frequent quarter points were priced in," Brown added.
Bets on the Fed hiking rates by 50 basis points next month jumped to 97.6% from 24% a day earlier, according to Investing.com's Fed Rate Monitor Tool.
The 10-year Treasury yield jumped 5% to top 2% for the first time in more than two years, drawing a bout of risk aversion across stocks, with tech bearing the brunt of the pressure.
Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:FB), Microsoft (NASDAQ:MSFT), and Amazon (NASDAQ:AMZN) edged more than 1% lower.
There were some positives in the markets, however, as the parade of quarterly earnings from corporates continued to mostly impress.
Coca-Cola (NYSE:KO) was up 0.8% after reporting fourth-quarter results that topped Wall Street expectations, though a weaker-than-expected outlook for the current year amid inflation pressures kept gains in check.
PepsiCo (NASDAQ:PEP) also delivered a beat on both the top and bottom lines, and also flagged concerns about rising input costs for the year ahead. Its shares were down nearly 2%.
Walt Disney (NYSE:DIS), meanwhile, was up more than 3% after reporting better-than-expected quarterly results, underpinned by strong growth in its parks business and upbeat subscriber numbers.
“Management continues to expect that net adds in FY22 will be higher in the second-half vs. the first-half of the year, which potentially suggests upside to consensus estimates, and we see the strong programming slate as justifying another price increase over the coming quarters,” RBC said in a note.
Uber Technologies (NYSE:UBER) slipped 5% despite better-than-expected quarterly results, and ride-hailing company talking up the prospect of being free cash flow positive before the end of the year.
In other news, Affirm (NASDAQ:AFRM) stock slipped 19% on Thursday after the company tweeted out its second-quarter results ahead of schedule.