(Bloomberg) — Stocks and bonds sold off after Federal Reserve Chairman Jerome Powell underwhelmed markets by refraining from pushing back more forcefully against the recent spike in Treasury yields.
The S&P 500 dropped toward the lowest in almost five weeks, while 10-year bond rates topped 1.5% after Powell said he would be “concerned” by disorderly markets, but stopped short of offering specific steps. The Nasdaq Composite erased its advance for the year, extending its losses from from a February peak to more than 9%. The dollar rose.
“Powell’s remarks were quite consistent with his recent speeches, but this was a minor negative as he failed to provide the type of reassuring comments investors were hoping for,” Adam Crisafulli, the founder of Vital Knowledge, wrote in a note. “He was vague about what actions specifically would be taken if the Fed felt yields were rising to excessive levels. He was given a few opportunities to endorse a change in QE duration, but never did.”
Read: Powell Says ‘Disorderly’ Market Conditions Would Concern Him
For Peter Boockvar, chief investment officer for Bleakley Advisory Group, the Fed has put itself in a “tough situation,” and the only way out is if inflation doesn’t rise any further and doesn’t hit the central bank’s 2% target.
“With long rates rising in response to his commentary, we are again seeing a market that is taking control of monetary policy from the Fed,” Boockvar said. “Long rates are rising right now because Powell is again very dovish. With respect to financial conditions, it will be up to the Fed on whether they tighten further. The more dovish they get in the face of market expectations of higher inflation, the more financial tightening we’ll see.”
Some key events to watch this week:
The February U.S. employment report on Friday will provide an update on the speed and direction of the nation’s labor market recovery.
These are some of the mains moves in markets:
Stocks
The S&P 500 Index decreased 1.3% as of 1:07 p.m. New York time.The Stoxx Europe 600 Index fell 0.4%.The MSCI Asia Pacific Index declined 2.2%.The MSCI Emerging Market Index dipped 2.2%.
Currencies
The Bloomberg Dollar Spot Index rose 0.3%.The euro decreased 0.4% to $1.201.The Japanese yen depreciated 0.7% to 107.74 per dollar.
Bonds
The yield on 10-year Treasuries climbed five basis points to 1.53%.Germany’s 10-year yield fell two basis points to -0.31%.Britain’s 10-year yield dipped five basis points to 0.731%.
Commodities
West Texas Intermediate crude gained 5.8% to $64.81 a barrel.Gold depreciated 0.3% to $1,706.81 an ounce.
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