Investors stepped up their selling of U.S. stocks after Federal Reserve Chairman Jerome Powell said policymakers will stand down on any rate moves, mainly because President Donald Trump's tariffs are, in his view, larger than expected.
He messaged that while channeling the fictional character Ferris Bueller from the 1986 film "Ferris Bueller’s Day Off."
"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 said in prepared remarks at the Economic Club of Chicago.
All three of the major averages, which were already lower in midday trading, slipped deeper into the red at the closing bell.
The Nasdaq Composite bore the brunt of losses, falling over 3% with Tesla, Starbucks and Amazon among the biggest losers, while Dollar Tree and Seagate posted gains.
Technology stocks led the S&P 500’s drop of more than 2%, while consumer discretionary and communication stocks also fell.
The Dow Jones Industrial Average fell 699.57 points, or 1.7%, led by Amgen and Apple, while Chevron and Travelers bucked the selloff. Energy stocks posted modest gains as oil rose above the $62 per barrel mark.
In the bond market, the 10-year Treasury yield drifted down to 4.2%.
President Trump continues to message his tariff strategy, including a recent 90-day pause on some countries and items, while exempting some technology products, including smartphones.
President Donald Trump takes a question from a member of the media during a meeting with Israeli Prime Minister Benjamin Netanyahu in the Oval Office of the White House on April 7. (Kevin Dietsch/Getty Images / Getty Images)
Over 60% of market participants expect a rate cut at the June meeting, followed by another at the July meeting.
Powell also weighed in on inflation.
"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 said.
Another inflation indicator can be seen in gold prices, which hit a fresh record $3,326.60 an ounce, clocking its largest one-day percentage gain since April 2020, as tracked by Dow Jones Market Data.
The SPDR ETF, the largest backed by physical gold, also rose in tandem.