Stock Market Today: Powell Sends Stocks On Roller-Coaster Ride

Federal Reserve Chair Jerome Powell speaking at podium at the Economic Club of New York

(Image credit: Spencer Platt/Getty Images)

Stocks were choppy in the lead up to this afternoon's speech from Federal Reserve Chair Jerome Powell, with tech- and tech-adjacent stocks outperforming on impressive Netflix (NFLX) earnings.

However, the main benchmarks went on a roller-coaster ride after Powell took the podium, eventually ending the day with a thud.

Investors had a handful of economic reports to take in ahead of Powell's speech. Data from the Labor Department, for one, showed last week's initial jobless claims fell to a nine-month low of 198,000 vs economists' expectations for a slimmer decline to 210,000.

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Separately, the National Association of Realtors said existing home sales fell 2% month-over-month in September to an annual rate of 3.96 million – the lowest level since 2010 – as mortgage rates remain high. Year-over-year, existing home sales were down 15.4%.

Netflix pops on price hikes, Tesla drops on Cybertruck warning

Headlines related to third-quarter earnings season were swirling today, too, with results from streaming giant Netflix nabbing the bulk of them. The company reported higher-than-expected earnings of $3.73 per share on in-line revenue of $8.5 billion. Netflix also said it added 8.76 million new subscribers in the third quarter – more than the 6 million analysts were expecting – and announced new price hikes for its basic and premium plans.

These new Netflix price hikes show "the company believes the consumer is still strong and willing to pay more for better quality content," says Anthony Denier, CEO of Webull, a commission-free trading platform. Additionally, "raising the prices is a way for the company to protect its margins." NFLX stock surged 16.1% today.

Tesla (TSLA) was a notable post-earnings mover, as well, though its shares went in the opposite direction as its mega-cap peer. The electric vehicle (EV) maker reported a third-quarter earnings beat of 66 cents per share, though revenue of $23.4 billion fell short of estimates. Gross margin fell to 17.9% from 25.1% one year ago, but this was slightly higher than analysts were anticipating.

Additionally, Tesla said it will start delivering its highly anticipated Cybertruck later this year. However, in the company's earnings call, CEO Elon Musk warned of "enormous challenges in reaching volume production with the Cybertruck and then in making a Cybertruck cash flow positive." Musk added that this is normal for a product with "a lot of new technology or anything new." As a result, TSLA stock fell 9.3%.

Powell reiterates concerns that inflation remains too high

But it was Powell's lunchtime appearance at the Economic Club of New York that put stocks on a short-lived roller-coaster ride. The head of the Federal Reserve stuck to his script that inflation remains too high and that the central bank will do whatever it takes to bring it down. Powell also reiterated that the Fed remains data dependent and given "how far we've come," it is "proceeding carefully."

"The Powell speech, while keeping his options open, did little to change our view that the Fed will pause their rate hikes again" at the next Fed meeting, says Scott Anderson, chief U.S. economist at BMO Capital Markets. The central bank still believes "the economy will slow despite a surprisingly strong third quarter. With Fed policy now firmly in restrictive territory, a strong case can be made to take a wait-and-see approach, until we get more clarity on the economic and inflation outlook."

As for the market reaction to Powell's speech, the main indexes jumped to their highs of the day shortly after it began – and just as quickly swung back into negative territory. Price action continued lower into the close, with the Dow Jones Industrial Average shedding 0.8% to 33,414, the S&P 500 slumping 0.9% to 4,278, and the Nasdaq Composite giving back 1.0% to 13,186.

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With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at a local investment research firm. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.