The Dow and broader U.S. stock market declined sharply on Tuesday, as investors reacted to dovish commentary from Fed chief Jerome Powell that suggested central bankers were becoming ever-more concerned about the economy.
Dow, S&P 500, and Nasdaq Sink in a Sea of Red
All of Wall Street’s benchmark indexes traded in negative territory on Tuesday, which reflected a tepid pre-market for Dow futures. The Dow Jones Industrial Average fell 179.32 points, or 0.7%, to 26,548.22.
The broad S&P 500 Index of large-cap stocks fell 1% to 2,917.37. Nine of 11 primary sectors reported losses, led by information technology and communication services.
Weakness in tech and communication shares had an oversized impact on the Nasdaq Composite Index, which has higher exposure to both sectors. The index plunged 1.5% to 7,884.72
The CBOE Volatility Index, Wall Street’s preferred measure of investor anxiety, jumped to its highest level in over three weeks. The so-called ‘VIX fear index’ peaked at 16.68 on a scale of 1-100 where 20-25 represents the historic average.
Fed’s Powell Stresses Central-Bank Independence
Fed Chair Jerome Powell told a New York audience on Tuesday that the central bank won’t cave to “short-term political interests” when formulating monetary policy. The comments were a clear reference to President Trump’s attempts to compel the central bank to slash interest rates.
“Since the beginning of the year, we had been taking a patient stance toward assessing the need for any policy change,” Powell said, according to CNBC. “We now state that the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion,