US stocks tumble after Fed testimony, Dow falls 1.7%

A trader works on the floor of the New York Stock Exchange, in New York City, on March 7, 2023. PHOTO: REUTERS

NEW YORK - Wall Street stocks tumbled on Tuesday after Federal Reserve chairman Jerome Powell said the US central bank could hike rates more than expected to quash inflation.

The Dow Jones Industrial Average shed around 575 points, or 1.7 per cent, to finish at 32,856.46.

The broad-based S&P 500 shed 1.5 per cent to 3,986.37, while the tech-rich Nasdaq Composite Index dropped 1.3 per cent to 11,530.33.

Investors now see a greater chance of a half-point interest rate increase at the Fed’s next meeting following Powell’s appearance, during which he told a Senate panel the Fed is prepared to accelerate the pace of interest rate hikes if strong economic data persists.

“If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes,” he said.

The US central bank has already raised its benchmark lending rate eight times since early last year, as it contends with inflation that remains stubbornly above its long-term target of 2 per cent.

Mr Quincy Krosby, of LPL Financial, said Mr Powell is preparing the market for a more aggressive response, depending on key jobs and pricing data in the coming days.

Mr Powell “has a mandate to maintain price stability, and that is what he is focused on,” Mr Krosby said. “Everything he has said points to the fact that he is going to do what he has to do.”

Among individual companies, Dick’s Sporting Goods surged 11.1 per cent as it reported a solid fourth quarter, including a 5.3 per cent rise in comparable store sales.

Weight Watchers International soared nearly 80 per cent after announcing the acquisition of Sequence Health, expanding its diet programme to include telehealth services.

Spirit Airlines jumped 4.7 per cent after the Justice Department filed a suit to block the company’s takeover by JetBlue, citing antitrust concerns. JetBlue lost 2.9 per cent. AFP

Join ST's Telegram channel and get the latest breaking news delivered to you.