NEW YORK — Traders on Wall Street returned to selling mode on Wednesday, with the value of the dollar continuing to drop. This shift came after gloomy remarks from Federal Reserve Chairman Jerome Powell, which exacerbated the decline in shares of NVIDIA, the leading chipmaker.
Following a comparatively calm period in the markets after last week’s turbulence related to tariffs, investors found themselves back on guard. As a haven asset during uncertain times, gold surged past $3,300 per ounce for the first instance ever.
US stocks started the day on a weaker note despite positive retail sales figures. However, the market declined significantly further following Powell’s warning that Trump’s tariffs might force the Federal Reserve into an awkward situation where they would have to decide whether to address inflation or unemployment issues.
Powell mentioned that although the Fed’s objectives for employment and inflation are mostly aligned right now, policymakers might face a “complex situation” based on future developments.
Powell warned the Economic Club of Chicago that tariffs are very likely to cause at least a short-term increase in inflation, adding that the impact could potentially last longer than initially expected.
US stocks plunged to their lowest levels during the session soon after Powell spoke, but they managed to regain some ground in the closing moments of trade.
The Nasdaq ended lower by over three percent.
Nvidia finished roughly seven percent lower after initially dropping over ten percent. The semiconductor firm revealed in regulatory documents that it anticipates a $5.5 billion impact related to export permits for technology deemed usable in a Chinese supercomputer by American authorities.
Jack Ablin from Cresset Capital mentioned that Powell’s remarks “ignited worries about stagflation.”
Powell “turned a slightly declining market day into quite a steep drop,” Ablin further explained.
The dollar likewise declined even more following Powell’s comments, dropping roughly one percent relative to the euro.
“markets are progressively believing that the US economic momentum is weakening,” stated an observation from Forexlive released prior to Powell’s comments, which hinted at market expectations for potential Federal Reserve interest rate reductions.
The assault on Wall Street came after a varied performance in European markets.
The London-based FTSE 100 share index finished the day up by 0.3%, following official figures indicating that British inflation decreased more than anticipated during March.
Frankfurt ended up 0.3 percent in positive territory whereas Paris dropped nearly 0.1 percent.
The previous week, Trump withdrew his harshest “reciprocal” tariffs for all countries with the exception of China but kept various other taxes in place, such as those imposed on vehicles.
There hasn’t been much indication of improved relations between Washington and Beijing, which has countered with additional tariffs of its own.
Fawad Razaqzada, a market analyst at City Index and Forex.com, stated that markets keep facing challenges due to the White House’s inconsistent stance on tariffs.
This month’s inconsistent U.S. trade policies have turned long-term planning into a risky endeavor, as volatility has become the predominant feature.
Prominent individuals at 2050 GMT
New York – Dow: Fell 1.7 percent to close at 39,669.39
New York – S&P 500: Fell by 2.2 percent to close at 5,275.70
New York – Nasdaq: Fell 3.1 percent to close at 16,307.16
London – FTSE 100: Increased by 0.3 percent to close at 8,275.60.
Paris – CAC 40: Fell by 0.1 percent to close at 7,329.97
Frankfurt – DAX increased by 0.3 percent to close at 21,311.02.
Tokyo – Nikkei 225: Fell by 1.0 percent to close at 33,920.40
Hong Kong – Hang Seng Index: Fell 1.9 percent to close at 21,056.98
Shanghai – Composite: Increased by 0.3 percent to close at 3,276.00
Euro/dollar: Increased to $1.1395 from $1.1282 on Tuesday
Pound/dollar: Increased to $1.3235 from $1.3231
Dollar/Yen: FELL to 142.12 yen from 143.21 yen.
Euro/pound: INCREASED to 86.06 pence from 85.26 pence
Brent North Sea Crude: Increased by 1.8 percent to $65.85 per barrel
West Texas Intermediate: Increased by 1.9 percent to reach $62.47 per barrel