Powell Warns of Tariff Consequences, Stocks Plummet

Federal Reserve Chair Jerome Powell warned that President Donald Trump's tariffs could lead to weaker economic growth, higher unemployment, and faster inflation simultaneously, a challenging scenario the Fed hasn't faced in about half a century. Powell stated that the level of tariff increases announced so far is significantly larger than anticipated and that the uncertainty around tariffs could inflict lasting economic damage. The Fed is responsible for promoting full employment and keeping inflation in check, but Trump's tariffs threaten both goals. Powell said the Fed's best move for now is to stand pat until the data clearly shows how the US economy is responding to Trump's policies. The US stocks tumbled as Powell spoke, with the Dow down 1.7%, the S&P 500 falling 2.5%, and the Nasdaq Composite sliding 3.5%.

US stocks fell on Wednesday as Federal Reserve Chair Jerome Powell warned that President Donald Trump's tariffs are "unprecedented in modern history" and will likely lead to higher inflation and slower growth. The Dow dropped 700 points, or 1.73%, the S&P 500 fell 2.24%, and the Nasdaq Composite tumbled 3.07%. Powell's comments echoed concerns that have been growing in recent weeks as consumers and businesses grapple with Trump's tariffs. The Trump administration's back-and-forth on trade policy has created uncertainty, with the White House announcing investigations into imports of pharmaceuticals and semiconductor chips, and Trump saying he will announce a tariff rate on imported semiconductors soon. The World Trade Organization expects global GDP to expand by 2.2% this year, 0.6 percentage points lower than it would be without additional tariffs. Gold surged to a record high above $3,300 a troy ounce as investors sought safe havens amid economic uncertainty.

Stocks fell on Wednesday as Federal Reserve Chair Jerome Powell expressed concerns about the potential inflationary effects of President Trump's tariffs, and tech companies, particularly chip makers, were hit hard after export restrictions were announced. The S&P 500 slumped 2.2%, with tech-heavy Nasdaq Composite index dropping over 3%. Nvidia, Advanced Micro Devices, and ASML saw significant declines after announcing the impact of export controls on their businesses. The concerns over tariffs and their potential to stoke inflation also led to a rise in gold prices to a record high above $3,300 per ounce.