HomeFinancial MarketsU.S. Stocks Decline Following Fed Chair's Testimony

U.S. Stocks Decline Following Fed Chair’s Testimony

U.S. stocks edged lower on Tuesday following Federal Reserve Chair Jerome Powell’s testimony in front of Congress. Powell expressed a hawkish economic outlook, telling Congress to expect interest rates to continue to rise in the face of persistent inflation.

Powell is delivering a semi-annual testimony to Congress. On Tuesday, he addressed the Senate Banking Committee, while on Wednesday he is scheduled to appear in front of the House Financial Services Committee.

“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell stated during Tuesday’s address. “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”

Following Powell’s testimony, the S&P 500 sunk 0.8% lower, while the tech-heavy Nasdaq Composite Index and the Dow Jones Industrial Average fell by 0.6% and 0.7% respectively.

Data from CME Group indicated that Powell’s statement encouraged investors to expect a 0.50% hike over a 0.25% hike later this month. The Federal Reserve is set to begin its next two-day policy meeting in two weeks, followed by its announcement on 22 March.

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