The S&P 500 took a dive overnight as more speakers from the Federal Reserve maintain the hawkish mantra. The dow jones , nasdaq , russell 2000 and S&P 500 saw declines in their cash session of -0.61% -1.11%, -1.52% and -1.68% respectively.
The magnitude of losses in each index appears to reflect the risk posed by tighter financial conditions. In an environment where the cost of capital increases, companies that rely on raising equity or issuing debt may find balance sheet management more difficult going forward
The Fed has made it clear that financial conditions need to be tightened in order to get inflation down. Overnight saw four Fed speakers take to the podium.
The broad message maintained by the central bank is that rates are going to continue to be raised and that they will need to stay there for a long period in order to stare down a 40-year high in price pressures.