Fed’s Powell Weighs Tariff Impact as Stocks Tumble

U.S. stock investors increased their sell-offs following remarks from Federal Reserve Chairman Jerome Powell, who indicated that the central bank would refrain from making any interest rate adjustments. Powell attributed this stance to unexpected developments related to tariffs imposed by President Donald Trump.

In a nod to the fictional character Ferris Bueller from the classic 1986 film “Ferris Bueller’s Day Off,” Powell emphasized the federal bank’s cautious approach. “As that great Chicagoan Ferris Bueller once noted, ‘Life moves pretty fast.’ For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance,” he stated during his speech at the Economic Club of Chicago.

FED’S POWELL SAYS CENTRAL BANK COULD FACE ‘CHALLENGING SCENARIO’ DUE TO TARIFFS

As a result, all three major U.S. stock indices, already down during midday trading, fell further by the market’s close.

The Nasdaq Composite was hit the hardest, reflecting a decline of more than 3%, with notable losses from Tesla, Starbucks, and Amazon. Conversely, Dollar Tree and Seagate managed to post gains.

Meanwhile, technology stocks significantly contributed to the S&P 500’s drop of over 2%, along with losses in consumer discretionary and communication sectors.

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The Dow Jones Industrial Average experienced a downturn of 699.57 points, a decrease of 1.7%, with prominent declines from Amgen and Apple. However, Chevron and Travelers emerged as exceptions to the broader market downturn. Energy stocks saw slight recoveries as oil prices climbed above $62 per barrel.

In the bond market, the yield on 10-year Treasury notes fell to 4.2%.

Trump continues to advocate for his tariff approach, which includes a recent temporary 90-day suspension affecting certain countries and products, while exempting select technology items such as smartphones.

Over 60% of market analysts predict a rate cut during the upcoming June Federal Reserve meeting, followed by a potential reduction in July.

Powell also addressed concerns regarding inflation.

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“Tariffs are highly likely to generate at least a temporary rise in inflation. The inflationary effects could also be more persistent. Avoiding that outcome will depend on the size of the effects, on how long it takes for them to pass through fully to prices, and, ultimately, on keeping longer-term inflation expectations well anchored,” he cautioned.

Another indicator of inflationary pressures came from the gold market, where prices surged to a record high of $3,326.60 an ounce, marking the largest one-day percentage increase since April 2020, according to Dow Jones Market Data.

The SPDR ETF, the largest exchange-traded fund backed by physical gold, mirrored this upward trend in prices.