Powell said Fed still in ‘wait-and-see’ mode on potential rate cuts
Key stock gainers lose ground
Fed’s Bullard not in favor of half point rate cut in July
Housing data and consumer confidence miss estimates
U.S., Chinese officials agree to keep talking, report says
U.S. stocks slid lower Tuesday after Federal Reserve Chairman Jerome Powell said the central banks was still monitoring the economy for signs of weakness and would seek to avoid a knee-jerk reaction in terms of cutting benchmark interest rates.
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.35% fell almost 0.7%, or 179 points, to end around 26,548, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.22% lost 28 points, or 1%, to 2,917. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -0.08% gave up 121 points, or 1.5%, to 7,885, extending its losing streak into a third day.
Stocks that led the selloff include shares of Discovery Inc. /zigman2/quotes/200511275/composite DISCA +1.97% , TripAdvisor Inc. /zigman2/quotes/206118480/composite TRIP +2.25% and Viacom Inc. /zigman2/quotes/202976785/composite VIAB +0.16% , which all closed the day lower by at least 3%.
Stocks fell earlier on Tuesday after fresh U.S. housing and consumer confidence data came in weaker than expected, which potentially could give the Federal Reserve more ammunition to cut rates in the near future.
They slipped further after St. Louis Fed President James Bullard said he was not in favor of a “huge action” on rates in July.
Read: Fed’s Bullard says he is not in favor of half point rate cut in July
Powell, who was speaking at the Council on Foreign Relations in New York, took a more measured approach than Bullard, signaling only that an interest-rate cut in July is not a done deal.
Wall Street currently has the odds of a rate cut in July at 100%, according to the CME Group’s FedWatch tool.
“I think this is a time when the Fed gave us a one-two punch,” said Bruce McCain, chief investment strategist at Key Private Bank, adding that Powell has signaled the Fed would be data-orientated and that it doesn’t see a clear reason to cut rates at this point.
“The hard part is that most indicators show a slowing of growth in the U.S., but not evidence of a clear tilt toward recession. The market is well ahead of that the Fed is willing to do.”