The US stock market has fallen for the tenth day in a row: What insiders say

Dec 18 (Reuters) – U.S. stocks slumped on Wednesday after the Federal Reserve cut interest rates by a quarter of a percentage point and the central bank’s economic forecasts signaled a slower pace of rate cuts next year.

The S&P 500 lost 2.96%, while the Nasdaq Composite lost 3.62% and the Dow Jones Industrial Average fell 2.61%.

The Dow posted its 10th straight decline, marking its longest daily losing streak since an 11-day slide in October 1974. The Dow and S&P posted their largest daily percentage declines since August 5, and the Nasdaq posted their largest daily declines since July 24th. The Russell 2000 small-cap index fell 4.4%, its largest decline since June 16, 2022.

Here’s what market insiders had to say about the latest developments:

GENE GOLDMAN, CHIEF INVESTMENT OFFICER AT CETERA INVESTMENT MANAGEMENT, EL SEGUNDO, CALIFORNIA.

“Investors had hoped he would walk back some of the comments in the statement. But in reality he just doubled. He’s worried about inflation, he’s worried about uncertainty. The Fed needs slow rate cuts.”

“Everything in the dot plot pointed to us having higher economic growth, a stronger job market, more inflation, fewer Fed rate cuts and a higher neutral rate.”

“All in all, it is worrying for the markets because the markets have priced everything in as perfect with their high valuations. No changes, no uncertainty. This fundamentally leads to even more uncertainty that the markets have not priced in.”

“The market finally saw the news and said, ‘Okay, this is actually going to happen. The Fed won’t cut interest rates that much.’ None of the information released today was a surprise.

ROBERT PAVLIK, SENIOR PORTFOLIO MANAGER AT DAKOTA WEALTH IN FAIRFIELD, CONN.

“It’s a little surprising how the market reacted to the news. Did what Powell said make things worse? is shaping up to be an 1100 point down day.”

“I don’t think that’s logical. Everything that has happened since the Fed’s action was largely expected. You got a cut and you have a Fed that’s on hold.”

“The question I was asked is: Will it stay that way? It will last until tomorrow, but then you will have to realize how much pressure is coming your way. Is it just selling pressure or is it attracting people who are jumping into profits who may have waited until early 2025 to sell. If it’s the latter, you need to wait for some sort of consolidation before you intervene, and you can tell from the volume whether it’s one or the other and the size of the moves.”

“Tomorrow I expect the market to open lower and see some buying interest around 10am. If that doesn’t pan out, the market will continue to sell off, and then sometime around midday they’ll try to see something.” If the market can stabilize, stocks will continue to fall if there isn’t enough buying interest.

CAROL SCHLEIF, CHIEF MARKET STRATEGIST, BMO PRIVATE WEALTH, MINNEAPOLIS

“I’m a little surprised that the markets are so surprised about the Fed’s conference call. I think traders were hoping that the Fed wouldn’t focus so much on the stubborn inflation side. Chairman Powell also repeatedly pointed out how strong the economy continues to be, especially compared to the rest of the world.

JAMIE COX, MANAGING PARTNER, HARRIS FINANCIAL GROUP, RICHMOND

“The Fed played the role of the Grinch today, rolling back two rate cuts in 2025. Markets tend to overstate interest rate cuts in the markets, leading to sharp pullbacks when even the slightest hint of a policy change occurs. The irony is that the Fed is far more likely to advance policy in 2025 than it expects, given where the labor market is headed.”

JEFF BUCHBINDER, CHIEF EQUITY STRATEGIST, LPL FINANCIAL, BOSTON

“In our 2025 outlook a few weeks ago, stretched positioning and sentiment left stocks vulnerable to a sell-off. The sharp rise in inflation expectations and the associated bond sell-off provided a convenient excuse. Once support from the tech industry evaporated, no other groups could step in to fill this gaping hole.

GUY LEBAS, CHIEF FIXED INCOME STRATEGIST, JANNEY MONTGOMERY SCOTT, PHILADELPHIA

“The markets were looking for a ‘scatter chart’ consistent with what we got. As of this morning, (2025) cuts of about two and a half were priced in, and we’re getting a forecast that calls for (2025) cuts of about two and a half, so that’s about in line. But it was really the distortion of the inflation outlook in the summary of economic forecasts and the confidence in inflation also contained in the summary of economic forecasts that was somewhat surprising.”

“The central trend area of core PCE inflation not only increased, but also trended to the right. Although there is currently a median of 2.5% for 2025, the range that Fed policymakers expect is 2.5% to 2.7%, so that is much higher inflation in 2025 than we are expecting previous forecasts had, and so that is the biggest change. ”

CHRISTOPHER HODGE, Chief US Economist, NATIXIS, NEW YORK

“The more hawkish SEP shows the Fed is serious about fighting inflation, and the big differences in how Trump might implement his policies will only complicate things.” We still expect disinflationary progress to continue will, but it only makes sense for the Fed to slow the pace of cuts to better assess how Trump’s policies interact with underlying economic dynamics. “

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