Stocks Dive as Tariff Turmoil Strikes: Fed Chair Sounds the Alarm
US stocks took a nosedive on Wednesday following a sharp warning from Federal Reserve Chair Jerome Powell. In his address, Powell emphasized the unprecedented nature of President Donald Trump’s tariffs and their unpredictable economic impact, an announcement that rippled through the financial markets.
A Steep Decline Across Markets
In a dramatic turn of events, the Dow plunged 700 points, registering a 1.73% drop, while the broader S&P 500 fell by 2.24%. The tech-heavy Nasdaq Composite wasn’t spared either, declining by 3.07%. “The level of the tariff increases announced so far is significantly larger than anticipated,” Powell stated at an event in Chicago. The consequences, as noted, are expected to manifest in higher inflation and slower growth, painting a grim picture for investors.
Ripple Effects on Global Giants
Nvidia, a leading chipmaker, reported a significant fall of 6.87% after revealing a $5.5 billion hit due to new US government restrictions on AI chip exports to China. This step signifies the escalating clash for AI dominance between the US and China. This brewing contest has been heightened by new developments in AI technology, such as DeepSeek’s low-cost, ChatGPT-like model.
Turbulent Trade Talks and Market Volatility
The uncertainty surrounding US trade policies has kept Wall Street on its toes. Solita Marcelli from UBS Global Wealth Management highlighted the persistent brinkmanship between the US and China. Despite some exemptions announced by Trump on electronics, the market remains volatile, demonstrating slight losses on Tuesday and continued decline on Wednesday.
A Global Economic Knock
The World Trade Organization forewarned of a global economic downturn due to these trade policies, forecasting a mere 2.2% growth in GDP—a decline exacerbated by additional tariffs. Meanwhile, gold reached a record high, symbolizing a safe haven amidst these uncertain times.
Banks Find Silver Linings Amidst Chaos
Despite the market’s chaos, major banks like Bank of America recorded strong earnings, with significant revenue from equities. However, CEOs express growing concerns about the economic climate’s unpredictability. As noted, JPMorgan Chase CEO mentioned the “considerable turbulence” the economy faces, a sentiment echoed by his peers across the banking sector.
Currency and Bonds Reflect Anxiety
The U.S. dollar weakened, matching the mood of a fraught market, while Treasury yields shifted as anxious investors flocked to government bonds. In this climate of “extreme fear,” as highlighted by CNN, all eyes are on Washington for potential policy shifts that could impact the sentiment and future direction of equity prices.
According to CNN, these developments symbolize an evolving landscape that both investors and the public must navigate, as the US-China trade tensions continue to unfold.
