NASDAQ Index, SP500, Dow Jones Forecasts – Stocks Dive As Powell Signals Fed May Raise Rates

SP500 Retreats As Traders Focus On Hawkish Powell

SP500 is under pressure as traders react to Fed decision and Powell’s comments. Fed decided to leave the federal funds rate unchanged, in line with analyst consensus.

Fed also released its updated economic projections, which indicated that the central bank expected higher inflation in 2026. PCE inflation projection was raised from 2.4% to 2.7%, while Core PCE inflation projection was increased from 2.5% to 2.7%.

Federal funds rate projection for 2026 remained unchanged at 3.4%. Projections for 2027 and 2028 were also unchanged at 3.1%. Longer-run projection was changed from 3.0% to 3.1%, so Fed believes that 3.1% is the neutral rate for the economy.

Powell noted that tariffs and high energy prices triggered inflation. He added that the impact of high energy prices was uncertain.  Powell also said that the progress on inflation was slower than previously expected.

Importantly, Powell noted that most Fed members do not believe that raising rates is the base-case scenario. However, some members discussed a potential rate hike.

Treasury yields moved higher as bond traders focused on Powell’s comments. The yield of 2-year Treasuries climbed towards the 3.75% level, while the yield of 10-year Treasuries settled above 4.25%.

Powell was hawkish, so it’s not surprising to see that stocks found themselves under pressure. Today, traders also focused on the developments in the Middle East.

Israel attacked Iran’s gas field, while Iran attacked gas facilities in the UAE and Saudi Arabia. Brent oil rallied towards the $110.00 level as traders focused on attacks and bet that the conflict would not end anytime soon. Rising energy prices will push inflation higher and may force the Fed to raise rates, which will be bearish for stocks.

Traders also had a chance to take a look at the Producer Prices data for February. PPI increased by +0.7% month-over-month, compared to analyst consensus of +0.3%. Core PPI grew by +0.5%, while analysts expected that it would grow by +0.3%. The reports showed that producer prices have started to grow in February, ahead of the major rally in the oil markets.

Energy stocks were the only gainers today as traders focused on the rally in the oil markets. Basic materials stocks found themselves under strong pressure as traders reacted to the sell-off in precious markets, which was triggered by strong dollar and rising Treasury yields.

Currently, SP500 is trying to settle below the support at 6640 – 6650. In case this attempt is successful, SP500 will move towards the next support level, which is located in the 6580 – 6590 range.

NASDAQ Moves Lower As Traders React To Oil Market Rally

NASDAQ pulled back as traders rushed to sell tech stocks amid rally in the oil markets and hawkish comments from Fed Chair Powell.

From the technical point of view, NASDAQ moved below the previous support at 24,700 – 24,750 and is trying to settle below the 24,500 level. In case this attempt is successful, NASDAQ will head towards the next support, which is located in the 24,350 – 24,400 range.

Dow Jones Tests Support At 46,300 – 46,400

Dow Jones is under pressure amid broad sell-off in the equity markets. The pullback is broad, and most stocks in the index are losing ground in today’s trading session.

A successful test of the support at 46,300 – 46,400 will open the way to the test of the next support level at 45,700 – 45,800.

For a look at all of today’s economic events, check out our economic calendar.