US Stocks Retreat as Powell's Caution on Rate Cuts Halts Rally
Fed Chair's warning on inflation and 'highly valued' markets sends S&P 500 and Nasdaq lower, snapping a three-day winning streak.
A three-day rally in US stocks came to an abrupt halt as Federal Reserve Chair Jerome Powell signaled a cautious approach to future interest rate cuts, citing persistent inflation risks. The S&P 500 fell approximately 0.6%, while the tech-heavy Nasdaq Composite saw a steeper decline of nearly 1% as investors recalibrated their expectations for monetary easing.
The market downturn was a direct reaction to Powell's remarks, where he emphasized the delicate balance the central bank must maintain. He noted that while the Fed is prepared to respond to a weakening labor market, there is 'no risk-free path' for monetary policy. The comments served as a stark reminder that the fight against inflation is not over, with Powell specifically highlighting the dangers if .
Investors were particularly unnerved by the Fed Chair's characterization of the current environment, where he . The statement, coming after a period of record highs, injected a dose of realism into a market that had been pricing in multiple rate cuts for the year. The selloff was accompanied by elevated trading volume, indicating a broad-based reaction to the Fed's more hawkish tone. The move underscores the market's sensitivity to Fed guidance, with future direction heavily dependent on upcoming inflation and employment data.