Powell Tells Wall Street No Signals Yet to Warrant Fast Cuts

“The economy is not sending any signals that we need to be in a hurry to lower rates,” Federal Reserve Chair Jerome Powell said Thursday during a speech in Dallas. Unsurprisingly, this sentiment wasn’t welcomed by traders on Wall Street eager for a more aggressive approach to interest rates. The S&P 500 hit session lows, Treasury two-year yields spiked and the dollar rose after Powell’s remarks. Finance professionals have counted on deeper rate cuts in coming Fed meetings, but inflation ticked up Wednesday and producer prices came in higher than expected on Thursday. Traders dialed back bets on a December rate cut to a little over 55% from roughly 80% in the previous session. While Powell has been clear there’s no linear path to 2% inflation, monetary policy could face wind shear if Donald Trump fulfills his promise to get the new Republican-controlled Congress to cut taxes, pushes out millions of immigrants and deploys tariffs. Policy uncertainty, it would seem, is likely contributing to the Fed’s more inertial attitude toward lowering rates. Here’s your markets wrap.

Automaker stocks fell Thursday after Reuters reported Trump is planning to propose Congress kill a $7,500 consumer tax credit for electric cars (this despite his new right-hand man being Tesla co-founder Elon Musk) as part of a promised attack on efforts to cut fossil fuel use. Rivian shares slid 11% and Ford and GM pared earlier gains. Tesla fell nearly 5%, though Reuters says Musk doesn’t mind because killing the credit will damage his rivals. The credit is a signature element of President Joe Biden’s Inflation Reduction Act, which poured billions of dollars into supporting the green transition and on-shoring EV manufacturing. A repeal—which would have to be passed by Congress—would complicate the already bumpy transition away from gas-burning cars. Automakers have pared back plans around EVs this year—Ford scrapped an electric SUV and GM is overhauling its battery plans—on consumer demand for hybrids instead.