The US financial market was shaken during the trading session on April 16 after Federal Reserve Chairman Jerome Powell warned about serious economic risks stemming from the import tax policy of President Donald Trump's administration. According to Powell, the new tax measures are pushing the US economy into a difficult position, with three simultaneous risks: slowing growth, higher inflation, and increasing unemployment.
The immediate reaction on Wall Street showed the level of concern among investors. The heat map of the US stock market was covered in red across almost all sectors. Major tech stocks plummeted: NVIDIA (NVDA) fell by 6.87%, Apple (AAPL) lost 3.89%, Microsoft (MSFT) decreased by 3.66%, Meta (META) dropped by 3.68%, and Tesla (TSLA) lost nearly 5%. The financial, healthcare, and energy sectors were also affected, except for a few rare stocks that maintained positive performance, such as JNJ (+0.19%), XOM (+1.06%), and ABT (+2.76%).
Powell acknowledged that the current tariff changes are unprecedented in modern times, making it difficult for the Fed to manage monetary policy. Although he noted that financial conditions are tightening, he affirmed that the Fed will not cut interest rates until there is clear evidence that inflation is steadily declining to the target level of 2%. As of April 2025, the benchmark interest rate is still maintained at around 4.25% – 4.5% since December 2024.
The market's previous expectations about the Fed's ability to loosen monetary policy this year were "doused with cold water" by this tough stance. At the end of the session, the Dow Jones fell by more than 700 points, equivalent to 1.7%, the S&P 500 lost 2.5%, and the Nasdaq Composite plunged by 3.5% – clearly reflecting the increasing level of concern among investors about the US economic outlook in the near future.
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