What an eventful week it has been for markets, with immense fluctuations that saw equities strikingly turn from red to green and back really quick. After digesting Powell’s comments, Major indices were turned green by bullish traders despite the ongoing concerns. While the S&P recorded its biggest one-day percentage gain in 2 years, Markets tumble right after, with the Dow Jones which carries the 30 prominent companies coming off as the biggest loser and closing with a 1000-point drop while the Nasdaq drops 5% to relive its worst day since 2020.  

While major indices gained on a hawkish Fed, a sell-off was also initiated for the same reason, only adding that a hawkish fed is now doubtful to curb inflation.

The Dow which carries the 30 most prominent companies was the biggest loser.

The Federal Reserve raised interest rates by 50 basis points with that being its biggest jump in 22 years, and further announced more hikes in June and July. However, with Powell indicating that a 75-basis point rate hike is not on the table which has been already priced in, investors somehow perceived this as less hawkish than need be. Causing intense volatility with major assets, dismissing a 50-basis point hype.

Moreover, slowing economic concerns remained the main concern for many investors, as this topic still remains a powerful trigger for market reversals. In addition to the wait for the U.S. Payroll data which will further tap on inflation and market jitters.

Other than equities seesawing, in the currency market, the dollar has been under the spotlight reaching a fresh new 20-year peak at 103.94. the USD has been gaining stance ever since the central bank announced tightening, wiping out any gains for other major currencies like the sterling and the euro. The sterling unexpectedly too fell overnight, despite the Bank of England raising rates by 25 basis points.

Markets now tune in to the labor market and potential market opportunities.