Stocks plummet as Powell warns of tariff-induced economic damage
Oil hits a 4-year low as global economic worries grow, with the Fed staying cautious. Trade tensions and a stronger dollar leave markets uneasy.
U.S. stocks suffered a sharp decline after Federal Reserve Chair Jerome Powell warned that the effects of the trade war—particularly tariffs—could be more severe than previously expected. His remarks raised concerns about higher inflation and slower economic growth. Market volatility surged as investors reacted with caution, and economic uncertainty intensified. The major stock indices reflected widespread pessimism.
S&P 500 suffers worst drop since 2020 as fed signals caution amid rising trade tensions
The S&P 500 dropped 4.5% over two days, marking its worst decline since March 2020, while the Nasdaq 100 entered bear market territory. The sell-off extended to the bond market, with 10-year Treasury yields falling to 3.94%, reflecting a growing perception of risk. A cycle of interest rate cuts is now expected, with markets pricing in four reductions by the Fed this year.
Powell maintained a cautious tone on interest rates, stating the Fed would be guided by data. However, geopolitical tensions and China’s tariff retaliation against the U.S. added to market fears. Economists are increasingly concerned that these protectionist measures could trigger a prolonged global economic slowdown. As a result, investors are turning to safe-haven assets like bonds.
Oil hits 4-year low amid economic slowdown fears and fed caution on trade tensions
Oil prices also fell sharply, reaching their lowest level in four years, reinforcing concerns over a potential global economic slowdown. The energy sector was hit hard, and a stronger U.S. dollar further complicated export prospects. Overall, global financial conditions appear increasingly unstable, with uncertainty dominating investor sentiment.
Powell’s comments underscored the potential damage of trade tensions and the need for flexible monetary policy. Analysts worry that tariffs might ultimately harm rather than protect the economy. The situation presents tough choices for policymakers. Short-term volatility is likely to continue, as investors closely monitor signals from both the Fed and the White House.
