President Donald Trump said the Federal Reserve is moving too fast with interest-rate increases and dismissed concerns about inflation, extending his run of criticism that central bankers have largely disregarded as they push ahead with higher borrowing costs.
Trump, who has been critical of the central bank's interest rate increases, tells reporters after landing in Erie, Pennsylvania, that he thinks "the Fed is making a mistake". "They're so tight. I think the Fed has gone insane".
After the Nasdaq Composite index and the Dow Jones dropped more than 4% and 800 points respectively on Wednesday, Trump said "it's a correction that we've been waiting for for a long time". "But I really disagree with what the Fed is doing".
The 10-year Treasury yield rose to 3.22 percent from 3.20 percent late Tuesday after earlier touching 3.24 percent.
Investors are leaning into safer stocks with steady dividends - utilities and consumer staples - and pulling out of the higher-paying, higher-risk stocks as other guideposts of growth, like the communication sector, tumbled. It is also expected to raise rates again by the end of the year.
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The markets have been on a historic climb - with the Dow and S&P each notching dozens of new highs since 2016 - buoyed by a strong US economy and solid corporate earnings. An additional 1.5-percentage-point fall would confirm a correction for that index.
The President said this week he prefers lower interest rates but added he would not speak directly to his Fed chairman appointee Jerome Powell, preferring instead to remain hands-off.
Numerous biggest U.S. names fell hard in Wednesday's session, with Apple, Boeing and Facebook all slumping more than 4% and Amazon, Nike and Microsoft shedding more than 5%.
Trump has previously voiced his displeasure with the Fed's rate hikes, saying he would rather shift his focus to the continued growth of the US economy and creating more jobs.
Powell's goal is to extend the second-longest USA economic expansion on record by moving interest rates up just quickly enough to prevent overheating, but not so rapidly that the central bank chokes off growth.
"It's shifting the tectonic plates", said Jack Ablin, chief investment officer at Cresset Wealth Advisors. "The Fed increasing rates to me was a sign that the economy was able to stand on its own two feet". In Paris, shares in Kering fell almost 10 percent, LVMH over seven percent and Hermes around five percent.