U.S. stocks plunged in another dizzying day of trading Thursday as investors dissected Federal Reserve Chairman Jerome Powell’s latest testimony before Congress and the possibility of stiff tariffs on steel and aluminum imports. The Dow Jones industrial average was down more than 500 points.

Stocks were higher earlier in the day after Powell appeared to calm one of the market’s main worries when he said that he does not see inflation in workers’ wages “at a point of acceleration.” Investors have been nervous about the possibility that the Fed may get more aggressive about raising interest rates to beat down inflation.

But stocks slid after President Trump told steel and aluminum executives that he will impose tariffs on imports next week.

White House announces plan for heavy tariffs on imported steel, possibly triggering trade war with China »

The Standard & Poor’s 500 index was down 52 points, or 1.9%, at 2,661 around 11:15 a.m. PST. The index is coming off its worst month in two years, when concerns about higher inflation and interest rates helped trigger a 10% drop.

The Dow Jones industrial average slid 565 points, or 2.3%, to 24,464, and the Nasdaq composite fell 149 points, or 2.1%, to 7,124.

FED SPEAK: Powell’s testimony before the Senate Finance Committee was highly anticipated, as worries about the possibility of much higher interest rates have been at the center of the market’s troubles over the last month.

Earlier in the week, he helped send Treasury yields jumping and stocks tumbling when he said that he’s feeling more optimistic about the economy. Some traders took that as a signal that the Fed may raise rates more quickly than expected.

On Thursday, though, he said that “I would expect that some continued strengthening in the labor market can take place without causing inflation.”


One recent fear for investors has been the possibility of a trade war, in which countries throw up barriers that hurt the global economy and profits for exporting companies.

Shares of steelmakers swung wildly amid speculation that the U.S. government would impose tariffs or quotas on steel and aluminum imports. They surged in the morning following reports that the White House planned to make the announcement shortly, only to lose most of the gains when subsequent reports said the announcement may not happen. They rose again after Trump told industry executives that he’ll impose import tariffs “next week.”

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