When Federal Reserve Chairman Jerome Powell speaks, he normally uses carefully chosen words to describe the economic environment.
He tries to steer clear of upsetting markets and talks endlessly about the Fed’s dual mandate of stable prices and maximum employment.
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On Wednesday, he jettisoned his cool-and-rational persona for a few minutes to talk about what the Trump tariffs are doing.
Stocks tumbled in response. But futures trading suggest some relief buying may be ahead.
“Tariffs are more likely to generate at least a temporary rise in inflation,” he told the Economic Club of Chicago. “The inflationary effects could also be more persistent.”
Related: Surprising trade war news sends Nvidia stock reeling
He foresaw a near-term period that would be “challenging.” Powell was not confident the Fed’s mandate was achievable over the next few months.
In truth, Powell has been saying variations of this theme for some weeks: The Fed would be reluctant to cut interest rates when the tariff situation in particular and the U.S. economy were so volatile.
Investors were not cheered
And it’s been a message many traders don’t like. Sure enough, markets reacted — badly.
Stocks, which had been rallying in the morning, sold off.
The Dow Jones Industrial Average slumped as many as 1,000 points before recovering to a loss of nearly 700 points, or 1.7%, to 39,669.3.
It was the Dow’s tenth loss of 600 points or more in 2025.
The Standard & Poor’s 500 Index dropped 121 points, or 2.2%, to 5,275.70, and the Nasdaq Composite Index slumped 515 points, or 3.1%, to 18,257.64.
Powell’s comments came as Nvidia (NVDA) shares slumped 6.9% to $104.49 after disclosing it was taking a $5.5 billion charge on earnings because it may not be allowed to sell some products to China.
Advanced Micro Devices (AMD) dropped 7.4% for the same reason.
And ASML Holding (ASML) , the important maker of chip-manufacturing equipment, blamed tariffs uncertainty for weaker than expected new orders. Shares fell 7.1% to $643.93 in New York.
Tesla (TSLA) fell 4.9% to $241.55.
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Deja view all over again?
So, maybe investors ended the day telling themselves, “O Lord, here we go again.” You can’t blame them.
The Dow is off 5.6% in April and 6.8% for the year. The S&P 500 has slid 6% so far in April and 10.3% for the year. The Nasdaq has dropped 5.7% this month and 15.6% this year.
But interest rates were essentially flat. The 10-year Treasury yield faded from 4.339% on Tuesday to 4.289% on Wednesday. A week ago, the yield hit nearly 4.6% as foreign investors seemed to dump their treasuries.
More Economic Analysis:
- Wall Street overhauls S&P 500 price targets as tariff selloff accelerates
- Inflation would like a word, please
- Stocks could bounce, but big bank earnings hold the cards
Related: Apple’s tech tariff exemption had one shocking supporter
A buy-the-dip day ahead?
That dip rally that looks a-forming will be welcome news for stocks on Thursday, which will be the last day of trading for the week. Stock-market trading will be closed for good Friday.
Thursday’s trading volume may be light as many investors get ready for Easter and the last few days of Passover, which ends Saturday.
So, perhaps a long weekend will let everyone cool off.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
