Stocks slide after Fed chief casts doubt on further rate cuts
Stocks tumbled Wednesday after Federal Reserve Chairman Jerome Powell shot down Wall Street’s expectations for a series of rate cuts throughout the year.
The Dow Jones Industrial Average, Nasdaq composite and S&P 500 index each fell more than 1 percent after Powell told reporters that the Fed may not cut rates again after reducing its baseline interest rate range Wednesday.
Investors had expected Wednesday’s rate cut to be the first in a series intended to defend the U.S. economy from trade tensions and looming trouble in Europe and China. But Powell rejected that notion, explaining the Fed may not deem further cuts necessary.
“Let me be clear, what I said was it’s not the beginning of a long series of rate cuts. I didn’t say it’s just one,” Powell said, calling the July cut a “mid-cycle adjustment.”
“When you think about rate cutting cycles, they go on for a long time, and the committee is not seeing … us in that position,” Powell continued. “You would do that if you saw real economic weakness.”
Powell’s comments shook investors, who had bet on at least two to three more cuts before the end of the year, leading stocks to spiral down in the market’s worst day since May.
The Dow closed with a loss of 333 points, finishing 1.23 percent lower on the day. The S&P fell around 1.1 percent, while the Nasdaq fell 1.2 percent by Wednesday’s closing bell.
Powell’s remarks also irked President TrumpDonald John TrumpHouse Oversight Committee requests documents from CBP Facebook groups Young Turks host says Marianne Williamson proved why she ‘deserves’ to be on debate stage White House calls trade talks with China ‘constructive’ MORE, who had called for a “large cut” Tuesday after months of pressuring the Fed to slash rates.
“What the Market wanted to hear from Jay Powell and the Federal Reserve was that this was the beginning of a lengthy and aggressive rate-cutting cycle which would keep pace with China, The European Union and other countries around the world,” Trump tweeted.
“As usual, Powell let us down, but at least he is ending quantitative tightening, which shouldn’t have started in the first place — no inflation. We are winning anyway, but I am certainly not getting much help from the Federal Reserve!”