US markets got the message from the Fed on interest rates

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After defying the Federal Reserve for weeks, US markets realized that interest rate hikes were likely here to stay.

• Disney earnings and revenue in the first fiscal quarter exceed analysts’ expectations. Investors liked what they heard. The company also lost about 600,000 fewer subscribers than it had previously anticipated. And he plans to cut 7,000 jobsi.e. 3% of its workforce.

On Wednesday, two officials essentially echoed Fed Chairman Jerome Powell’s hawkish speech on Tuesday. The Fed’s Waller warned that tackling inflation could be a long process, “with interest rates higher for longer than some currently expect.” Likewise, New York Fed President John Williams said that monetary policy could become even tighter than the central bank had anticipated.

Investors have been paying attention. The Nasdaq Composite fell 1.68%. The S&P 500 slid 1.11% and the Dow Jones Industrial Average slid 0.61%. Markets were also battered by a disappointing earnings season: 42 S&P 500 companies issued negative earnings forecasts for the first quarter of 2023, according to Refinitiv – a higher proportion than the historical average.

Although unrelated to earnings, Alphabet shares, Google’s parent company, fell more than 7% on Wednesday after investors were disappointed by the company’s showing of Bard. They may also have been concerned after Google ran an ad for Bard, in which he gave the wrong answer to a prompt about the James Webb Space Telescope. In a wave of bad news, investors might indeed need a telescope to find short-term good news.

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