US stocks ended the volatile session lower after two Federal Reserve officials underscored the central bank’s determination to stand firm until it cuts inflation significantly.

The S&P 500 fell 0.9%, starting a two-day rally. The Tech Nasdaq 100 also fell. Yields on government bonds rose, with the 10-year yield around 3.87%.

Fed Vice President Lele Brainard briefly lifted sentiment after speaking at a Bloomberg event in Washington that it would be “immediately” appropriate for the central bank to begin easing rate hikes. However, he also emphasized that the Fed has “more work to do” to bring inflation down, which has some investors nervous. Brainard didn’t explicitly take a half-point cut in December, nor did he make clear what he meant by “soon”.

“I think Brainard’s comments underscore the uncertainty of how to proceed and the committee’s reliance on data,” said Jake Schurmeier, portfolio manager at Harbor Capital Advisors. “They don’t want the slower pace of rate hikes to be confused with a less stringent policy.”

Earlier, hawkish comments from Fed Governor Christopher Waller rattled markets as investors pondered whether the post-CPI euphoria was overdone.

Last week’s CPI-driven rally that propelled the S&P 500 to its best week since June may prove unsustainable, according to Christopher Smart, Barings head of global strategy and head of the Barings Investment Institute.

“The bad news is that in this uncertain economic moment data is likely to be mixed and contradictory in the coming months. The pace of the decline will be uneven,” he said. “Besides, there is still a long way to go to achieve the Fed’s 2% average inflation target. That’s why Fed governors are lining up to dampen market euphoria that a real turnaround is imminent.”

The cumulative impact of past rate hikes will continue to weigh on economic growth and corporate earnings, according to Mark Hefele, chief investment officer at UBS Global Wealth Management, who advises investors to stay on the defensive.

This week’s highlights:

  • Fed’s John Williams will moderate the panel on Monday
  • China Retail Sales, Industrial Production, Tuesday Unemployment Survey
  • Former US President Donald Trump plans to make an announcement on Tuesday
  • American Empire Manufacturing, PPI, Tuesday
  • US corporate stocks, cross-border investment, retail sales, industrial production Wednesday
  • John Williams, Lael Brainard and SEC Chairman Gary Gensler spoke Wednesday
  • ECB President Christine Lagarde spoke on Wednesday
  • Eurozone CPI Thursday
  • US new housing, initial jobless claims Thursday
  • Fed’s Neil Kashkari, lecture by Loretta Mester, Thursday
  • The US Conference Board’s leading index, Existing Home Sales, Friday

Some of the major moves in the market:

Stocks

  • The S&P 500 was down 0.9% by 4:00 PM. New York Time
  • Nasdaq 100 down 1%
  • The Dow Jones Industrial Average fell 0.6%
  • MSCI World Index up 1.8%

currency

  • The Bloomberg Dollar Spot Index gains 0.2%
  • The euro fell 0.1 percent to $1.0333
  • The British pound fell 0.6 percent to $1.1758
  • The Japanese yen fell 0.7 percent to 139.74 per dollar

cryptocurrencies

  • Bitcoin fell 0.7% to $16,246.64
  • Ether fell 0.2% to $1,213.63

Bonds

  • The yield on the 10-year note rose six basis points to 3.87%
  • Yield on German 10-year bonds fell one basis point to 2.15%
  • The yield on the UK 10-year bond rose one basis point to 3.37%

Commodities

  • West Texas Intermediate Crude Oil fell 4.1% to $85.30 per barrel
  • Gold futures were up 0.4% to $1,776.30 an ounce
  • This story was created with Bloomberg Automation.
  • Assisted by Sujata Rao, Cecile Gutscher, Brett Miller, and Vildana Heyrich.

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