Highlights
Stocks sank again Wednesday on worries about trade and after Federal Reserve Chair Jerome Powell warned of inflationary effects from tariffs and suggested the Fed would not rush to cut rates. The Dow Jones industrial average lost 1.7 percent, the S&P 500 fell 2.2 percent and the Nasdaq was down 3.1 percent. Bond yields and the dollar declined while oil prices rose.
Technology stocks got off to a weak start on Nvidia's news that it would take a $5.5 billion charge in response to new US restrictions on chip sales to China. Analysts said the firm would see more losses in upcoming quarters if the restrictions stick. Other firms including Advanced Micro Devices and ASML sold off on similar concerns. Comments from other firms reporting quarterly results suggested lack of visibility flowing from uncertainty over trade.
The market lost more ground in the afternoon after Powell warned that higher than expected tariffs would slow growth and add to inflation. The Fed chair said the outlook remains uncertain and said the Fed is still trying to understand the potential impact of tariffs, but said they are highly likely to generate at least a temporary rise in inflation. And he warned the inflationary effects could also be more persistent. Earlier, reaction was limited to retail sales figures and industrial production that generally matched expectations, and were considered old news as they covered March. Presumably, much of the strength in both reports reflected accelerated spending before tariffs kick in.
Among stock sectors, worst performers were communications services, consumer discretionary, technology, and financials. Energy held up best.
Technology stocks got off to a weak start on Nvidia's news that it would take a $5.5 billion charge in response to new US restrictions on chip sales to China. Analysts said the firm would see more losses in upcoming quarters if the restrictions stick. Other firms including Advanced Micro Devices and ASML sold off on similar concerns. Comments from other firms reporting quarterly results suggested lack of visibility flowing from uncertainty over trade.
The market lost more ground in the afternoon after Powell warned that higher than expected tariffs would slow growth and add to inflation. The Fed chair said the outlook remains uncertain and said the Fed is still trying to understand the potential impact of tariffs, but said they are highly likely to generate at least a temporary rise in inflation. And he warned the inflationary effects could also be more persistent. Earlier, reaction was limited to retail sales figures and industrial production that generally matched expectations, and were considered old news as they covered March. Presumably, much of the strength in both reports reflected accelerated spending before tariffs kick in.
Among stock sectors, worst performers were communications services, consumer discretionary, technology, and financials. Energy held up best.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
