US stocks end with big losses on tough Powell speech
Wall Street equities ended with steep losses on Friday following tough talk from Federal Reserve Chair Jerome Powell, who warned of "pain" ahead for Americans in the battle against inflation, with the Dow losing more than 1,000 points. It was the worst single-day point loss for the Dow Jones since mid-May and all three major indices dropped three percent or more. Markets in recent weeks had gained ground amid hopes the Fed would dial back its aggressive interest rate hikes, and perhaps even begin to cut next year. But with inflation at a 40-year high, Powell doused any hope of a policy shift in his speech to the annual central banking symposium in Jackson Hole, Wyoming, saying the Fed will continue to act "forcefully" and keep policy tight, which is likely to slow the economy and the strong jobs market. Failing to do so "would mean far greater pain," he said. Keith Buchanan at Globalt Investments said, "This wasn't a shocking speech by any stretch of the imagination." But he said the negative reaction was due to "the last possibility of a pivot being kind of shoved off the table." While the major indices initially seemed to take the Fed chief's blunt comments in their stride, losses accelerated ahead of midday and got steeper by the close. The Dow lost 3.0 percent to finish the week at 32,283. The S&P 500 fell 3.4 percent to 4,057, while the Nasdaq dropped 3.9 percent to close at 12,141. Upbeat economic data meanwhile continued to trickle in, with the Fed's preferred inflation index falling 0.1 percent in July compared to June, according to the Commerce Department. But Powell said the recent good news on prices is not enough to bring inflation back to the Fed's 2 percent target, and rates will stay high for some time. (AFP)