US markets continue to fall further as investors continue booking profits from the post-election rally. Moreover, the remarks from the Fed Chair, Jerome Powell, acted as a crucial trigger behind the market’s decline. 

S&P 500 and the Nasdaq Composite fell 0.6% each, while Dow Jones slumped 200 points. 

Jerome Powell in Dallas said that the central bank “didn’t need to be in a hurry” in slashing the interest rates. Powell’s remarks, the Fed fund futures predicting a cut in the December meeting fell to a 62% probability from 82% earlier in the day. 

The Trump Trades continued to lose steam, with Tesla shares falling another 6%, whereas the smallcap index Russell 2000 slumped 1%. 

While many investors are hesitant to sell at this point, caution remains essential, according to Fawad Razaqzada of City Index and Forex.com. He highlighted that the S&P 500 appears overbought based on several indicators, suggesting a potential correction or period of consolidation.

Razaqzada emphasised that while a significant selloff is unlikely unless the index breaks key support levels, a modest pullback seems plausible. For experienced traders, such a dip could present buying opportunities, though no definitive trend reversal signal has been observed yet.

Mike Wilson of Morgan Stanley noted that the S&P 500 might approach 6,100 by year-end, driven by optimism surrounding the Republican takeover of the White House and Congress. However, surpassing that level could prove difficult in the near term.

Meanwhile, Dennis DeBusschere of 22V Research stated that a higher likelihood of a December Fed rate cut could further strengthen an already resilient economy. For 10-year yields to remain steady, economic data must continue to align with a growth rate of around 2.5% or lower, he added.

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