S&P 500 and Nasdaq break upward trends after the Treasury auction and Jerome Powell.

 S&P 500 and Nasdaq break upward trends after the Treasury auction and Jerome Powell.

According to Jerome Powell, central bank officials "are not confident" that interest rates are high enough to control inflation and that increases in the supply of labor, products, and services would provide little further support.

The Nasdaq and S&P 500 had their longest winning streaks in two years end on Thursday as U.S. equities finished down. This was due to Treasury rates rising after a poor auction of 30-year notes and remarks made by Federal Reserve Chair Jerome Powell.

Powell said that while there may not be much more support from increases in the supply of labor, products, and services, central bank officials "are not confident" that interest rates are high enough to control inflation.

Before Powell's remarks, the market had seen a little decline in stocks as interest rates rose after a lackluster auction of $24 billion in 30-year Treasuries, with demand for the instrument exceeding supply by 2.24 times. The yield on the benchmark 10-year Treasury note increased to 4.654% for the day, but it ended the day up 12.8 basis points at 4.636%.

Powell is "taking a hawkish viewpoint again," according to Peter Cardillo, chief market economist at New York's Spartan Capital Securities. "He's encouraging the market that the fight against price increases has not been won a and if financial circumstances warrant, they will not be reluctant to hike rates again," he said.

"If you add up all the observations, Powell is telling the market not to get too complacent and that’s putting a little pressure on stocks."

The S&P 500 (.SPX) dropped 35.43 points, or 0.81 percent, to 4,347.35, the Nasdaq Composite (.IXIC) lost 128.97 points for it, or 0.94 percent, to 13,521.45, as well as the Dow Jones Industrial Average (.DJI) slid 220.33 points, or 0.65%, to 33,891.94.

The S&P and Nasdaq had their greatest one-day percentage falls since October 26, while the Dow saw its largest since October 27.

The monthly payrolls report and other softening economic indicators have helped stocks rise, and U.S. Treasury yields have fallen from multi-year highs as investors believe the Fed's most recent policy meeting indicated the central bank was done raising interest rates.

The rate of gains slowed after Wall Street's explosive climb last week, and on Thursday, the S&P 500's eight-session winning run and the Nasdaq's nine-session winning streak—both the longest since November 2021—were broken by the dips.

Despite Powell's remarks, the majority of traders are still betting that the Fed will maintain current interest rates this year. However, the CME Group's FedWatch Tool now projects that rates will begin to decline later in 2024.

In an effort to temper expectations for rate cuts, a few of officials have already adopted a hawkish stance this week, emphasizing the importance of data-dependent policymaking.

In the meanwhile, a Labor Department study revealed that although there are indications of a cooling labor market, the number of unemployment claims decreased last week to 217,000, suggesting layoffs have not yet increased.

Walt Disney (DIS.N) surged 6.9% on a surprise quarterly profit and news that major studios and Hollywood performers had tentatively struck an agreement.

The reductions in healthcare (.SPXHC) and consumer discretionary (.SPLRCD), which both had decreases of around 2%, led to declines in all 11 of the main S&P sectors.

Among other companies, Arm Holdings, a semiconductor company, fell 5.2% due to a negative estimate for third-quarter revenue.

On the NYSE, falling issues outnumbered advancers by a ratio of 2.7 to 1, and on the Nasdaq, the ratio was 2.8 to 1.

While the Nasdaq registered 47 new highs and 321 new lows, the S&P 500 recorded 19 new 52-week highs and 12 new lows.

The volume of shares traded on U.S. exchanges was 11.36 billion, which was lower than the average of 10.97 billion for the whole session for the previous 20 trading days.