New York: Wall Street stocks plunged Friday after Federal Reserve Chairman Jerome Powell warned the Dow would drop more than 1,000 points and bring “pain” to Americans in the fight against inflation. finished.
The Dow Jones Industrial Average posted its worst one-day drop since mid-May, with all three major indexes down more than 3%.
Markets have rallied in recent weeks on hopes that the Fed will scale back its aggressive rate hikes and possibly even start cutting rates next year.
But with inflation at its highest level in 40 years, Powell said in a speech at the annual central bank symposium in Jackson Hole, Wyoming, that the Fed would continue to act “vigorously” and tighten policy. He dashed hopes of policy change. It could slow down the economy and a strong job market.
Failure to do so, he said, “means a lot more pain.”
Keith Buchanan of Globalt Investments said:
However, he said the negative reaction was due to “the last possibility that the pivot will be pushed off the table.”
The major indexes initially seemed to take the Fed’s candid comments well, but losses accelerated before noon and steepened to close.
The Dow fell 3.0% to end the week at 32,283.4.
The broad S&P 500 fell 3.4% to 4,057.66, while the tech-rich Nasdaq Composite Index fell 3.9% to close at 12,141.71.
Meanwhile, the Fed’s preferred inflation index fell 0.1% in July compared to June, a trickle of positive economic data, according to the Department of Commerce.
However, Powell said the recent good news on prices will not be enough to bring inflation back to the Fed’s 2% target, and interest rates will remain high for some time.
