Yahoo Finance Live anchors Seana Smith, Dave Briggs, and Rachelle Akuffo look at how markets are responding to the news of the Fed's latest rate hike.
SEANA SMITH: That was Fed Chair Jay Powell wrapping up his news conference after the Fed raised rates by 75 basis points, as Wall Street had expected. Now, it was a roller coaster ride. When you take a look at the market's reaction, stocks erasing some of the gains on the initial announcement. As you can see, we are a bit mixed right now. Dow back in negative territory, off just around 92 points. S&P trading to the downside. NASDAQ, though, holding onto gains.
And Dave, just a couple of big takeaways. I think, one, the fact that Jay Powell once again reiterating the fact that the Fed is going to do whatever it takes to get inflation under control. He was asked a couple of times about the jobs market, his assessment of the labor market right now. He said a couple of times that it continues to be out of balance. So far, we are only seeing modest evidence of the labor market cooling. So I think the big question is, how big of a pullback do we have to see in the labor market?
And then he once again reiterated the fact that it isn't a painless way-- there is not a painless way to get inflation behind us. So lots of questions just in terms of how big of a slowdown. He wasn't-- he didn't necessarily go as far as saying we need to see a recession, although it seemed like the data points might be leading us there.
DAVE BRIGGS: Yeah, as to a recession, he did not-- I mean, in terms of the soft landing, he was very noncommittal and, in fact, said, we don't even know how severe a recession we might have. To your point about the pain, everyone kept trying to press him to get to that pain. The estimate is 1.2 million jobs will be lost, according to the estimate that is 4.4 unemployment by next year. But that seems way low. It may be double that to get the inflation back to where he'd like it.
Price stability the word of the day. I think 12, 13, 14 times the phrase of the day. For me, I'm always watching housing and comments on real estate, which he had several, more than we've seen in all of the five hikes this year. He talked about it a lot. Said we weakened significantly, suggesting that is the one area that they have succeeded the most. And that's what we've been seeing in all the housing data lately.
There's been a lot of questions about when, Seana and Rachelle, they would start to sell off, roll off mortgage-backed securities off of the balance sheet. We keep wondering because of the impact that will have on housing is severe. He said, no, we're not thinking about it. And we're not even close. And then, lastly, on housing, the prices rose way too fast, that we need a correction to get back to the right place. And then, lastly, he said shelter inflation will remain high for some time. Of course, the stickiest part of that right now is rent. So a real focus on housing today by the Fed chair, Rachelle.
RACHELLE AKUFFO: And we did hear a lot of questions, a lot of people pressing him on when we can expect some sort of normalcy, when we can expect that pivot to happen. But he came right out of the gate saying, look, we're going to do what we have to do until the job is done. And they did mention, obviously, some of the reporters, this lag between what we get with inflation data versus what we see in the real economy, and whether or not there's a risk of going too far.
But we did see that the Fed is still willing to be aggressive to get inflation down, even if that does potentially boost recession risks, rather than having inflation linger for longer, and then having to sort of backtrack. And we know some analysts have already criticized the Fed for being too late out of the gate when inflation first started to tick up. And it looks like they're not willing to make that same mistake again, Seana.
SEANA SMITH: Yes, certainly. It was interesting just when he was asked about the variable lags on inflation. He did say that there is a possibility we will pause, but not at this level. Really just to wait and really evaluate the effect that the rate hikes have already had or are having right now on the economy--