The major US stock index gave up some of its early gains after Federal Reserve Chair Jerome Powell stated that the US central bank is “strongly committed” to lowering inflation.
The energy sector of the S&P 500 fell by 4.2 percent.
After Powell testified before the U.S. Senate Banking Committee that higher rates are unpleasant but are the only tool the U.S. central bank has to limit inflation, the dollar dropped along with U.S. Treasury yields amid worries that the U.S. economy could enter a recession.
“Like all Fed commentary, there are positives and negatives, but the overall message is the Fed is not backing away from rate hikes,” explained Tim Ghriskey, an Ingalls & Snyder portfolio strategist.
The Federal Reserve recently increased the interest rate by 0.75, representing the biggest rise in 28 years.
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The Nasdaq Composite fell 16.22 points, or 0.15 percent, to 11,053.08, while the Dow Jones Industrial Average dropped 47.12 points, or 0.15 percent, to 30,483.13 and the S&P 500 dropped 4.9 points or 0.13 percent.
The global MSCI stock index fell 0.49 percent, and the pan-European STOXX 600 index lost 0.70 percent.
Investors are still evaluating how concerned they should be about central banks’ ability to push the global economy into a recession by raising interest rates.
Back in April, the Bank of Japan held a meeting to discuss the possible effects of the plummeting currency. The details from the meeting revealed the central bank was worried about the impact it could have on the business environment in the country.
The Japanese yen gained 0.27 percent.
Treasuries have also seen a rise in the price of ten-year notes to 3.156%
U.S. crude prices dropped $3.33 to end the day at $106.19 per barrel, while Brent prices declined $2.91 to $111.74 per barrel.
To help tackle record pump prices, U.S. President Joe Biden urged Congress to approve a suspension of the federal gasoline tax for a period of three months.
Biden reacted angrily when a reporter inquired about the looming recession. The specifics of the controversial interview were revealed in related news.
A beach-strolling President Biden lashed out at a reporter, as Americans struggle to keep their heads above water amid inflation-fueled price hikes, for daring to ask about the possibility of a US recession.
Near his vacation home in Rehoboth Beach, Del., Biden was asked on the sand about economic experts “saying a recession is more likely than ever,” he barked: “Not! The majority of them aren’t saying that. Come on, don’t make things up, OK?”
“Now you sound like a Republican politician,” the president griped, before realizing how he came off and insisting, “I’m joking. That was a joke.”
“But all kidding aside, no, I don’t think it is [inevitable]. I was talking to [former Treasury Secretary] Larry Summers this morning and there’s nothing inevitable about a recession,” Biden said.