Stock Market Today: Dow Drops After Powell Says the Fed Is Prepared to Raise

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The stock market was sliding Monday as Federal Reserve chair Jerome Powell indicated that the central bank could be more aggressive in lifting interest rates.

The

Dow Jones Industrial
Average has fallen 316 points, or 0.9%, while the S&P 500 has declined 0.5% and the Nasdaq Composite has dropped 1.1%.

At the National Association of Business Economists conference, Powell said that the Fed is prepared to lift the benchmark lending rate in increments of a half a percentage point, rather than the standard quarter of a percentage point, going forward. The Fed lifted the rate by a quarter of a percentage point this March and indicated that there will be seven hikes this year—and more after. Now, markets are on edge that the central bank will be more aggressive than that, as it tries to tame inflation by curbing economic demand.

This comes after many on Wall Street had said the Fed might be bluffing, that it won’t actually move quite so aggressively in raising rates. Some had said that the economy would show signs of cracking before the Fed can hike as many times as it is projected to right now. The Fed is proving — for the moment — that it isn’t messing around.

The bond market was reflecting the Fed fears. The two year Treasury yield gained to as high as 2.12%, a new pandemic-era high. That yield attempts to forecast the level of short-term rates a couple years from now.

“The FOMC fears higher inflation more than they do a slower economy, or weaker jobs market,” writes Stock Traders Daily’s Thomas Kee. “[They] are officially hitting inflation head-on now, and they are not likely to stop anytime soon.”

Higher oil prices also weighed on the stock market. West Texas Intermediate crude oil was up just over 5% to almost $09 a barrel, and is now up more than 45% in 2022. That raises costs for anyone who uses oil and gas, which is, well, all of us. The rising oil price does, however, help oil stocks, and the

Energy Select Sector SPDR exchange-traded fund
(XLE) has gained 3.6%.

The Dow Jones Industrial Average, meanwhile, is getting hit by the big drop in Boeing (BA). The plane was a 737, but not a 737 Max. Still, the stock was down about 4.1%, and had contributed nearly 50 points to the Dow’s decline.

These events come just after Investors, flush with cash, went into dip-buying mode last week thanks to some encouraging headlines on diplomatic progress between Russia and Ukraine. But for the broader market, even after last week’s rally, the S&P 500 finds itself near 4,440, below the 4,600 level that put a ceiling on markets in February. Breaking that level could determine whether the current rally has legs or is just a bear-market bounce.

“Near-term overbought conditions while weekly and monthly momentum remain negative create a difficult spot to chase this rally,” wrote Fundstrat technician Mark Newton. “More conviction is needed.”

Here are other stocks on the move Monday:

SAP

(SAP) fell 3% following news that the chief financial officer at the German software group would resign. Luka Mucic will continue in his role into next year.

Warren Buffett’s

Berkshire Hathaway

(BRK.A and BRK.B) agreed to buy reinsurer

Alleghany

(Y) for $848.02 a share in cash, or about $11.6 billion. The deal represents a 29% premium to Alleghany’s average stock price over the last 30 days, the companies said in a statement. Berkshire’s Class B stock was up 2.1%, while Alleghany stock shot up 24%.

Private-equity group Thoma Bravo has agreed to buy business planning software-maker

Anaplan

(PLNA) for $66 a share, or $10.7 billion. The deal represents about a 46% premium to the volume-weighted average price of

Anaplan

stock for the five days ended March 18, the companies said in a statement. Anaplan stock soared 28%.

Nielsen Holdings

(NLSN) stock fell 7.2% after the company rejected a $9 billion buyout offer. The stock had gained 40% on news of a potential deal from Mach 11 coming into trading Monday. 

BlackBerry

…