(Bloomberg) — US stocks turned lower and Treasury yields rose after the Federal Reserve’s latest rate decision and Chair Jerome Powell’s speech signaled the central bank sees work left to do in its battle against inflation.

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The S&P 500 and the Nasdaq 100 erased earlier gains after the Fed raised its benchmark rate by half a percentage point. The indexes pushed lower after Powell reiterated his hawkish stance. The policy-sensitive two-year Treasury yield climbed to around 4.29%. The dollar strengthened.

Stocks had rallied more than 6% since the last rate decision on the expectation that the central bank would be able to slow and possibly stop its tightening next year. That view took a hit with officials’ latest projections that the Fed funds rate will top 5% in 2023, before being cut to 4.1% in 2024.

Powell restated that policy will need to remain tight for “some time” to restore price stability. He provided no dovish relief and emphasized that the Fed needed more evidence beyond October and November’s softer consumer price index numbers to have confidence that inflation is coming down meaningfully.

Key events this week:

  • China medium-term lending, property investment, retail sales, industrial production, surveyed jobless, Thursday

  • ECB rate decision and ECB President Lagarde briefing, Thursday

  • Rate decisions for UK BOE, Mexico, Norway, Philippines, Switzerland, Taiwan, Thursday

  • US cross-border investment, business inventories, empire manufacturing, retail sales, initial jobless claims, industrial production, Thursday

  • Eurozone S&P Global PMI, CPI, Friday

Some of the main moves in markets:

Stocks

  • The S&P 500 fell 1.1% as of 2:38 p.m. New York time

  • The Nasdaq 100 fell 1.5%

  • The Dow Jones Industrial Average fell 1%

  • The MSCI World index rose 1.1%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.1%

  • The euro was little changed at $1.0624

  • The British pound fell 0.1% to $1.2353

  • The Japanese yen fell 0.3% to 135.97 per dollar

Cryptocurrencies

  • Bitcoin rose 0.1% to $17,782.55

  • Ether fell 1% to $1,305.97

Bonds

  • The yield on 10-year Treasuries advanced three basis points to 3.53%

  • Germany’s 10-year yield advanced one basis point to 1.94%

  • Britain’s 10-year yield advanced one basis point to 3.31%

Commodities

  • West Texas Intermediate crude rose 2.6% to $77.33 a barrel

  • Gold futures fell 0.7% to $1,813.20 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Srinivasan Sivabalan, Isabelle Lee and Emily Graffeo.

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©2022 Bloomberg L.P.

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