U.S. stocks slump after Federal Reserve’s Powell warns of economic woes because of tariffs

Federal Reserve Chair Jerome Powell delivered a warning about the potential economic impact of President Trump’s tariffs during his testimony at a House committee in the Capitol on February 12, 2025. On Wednesday, the U.S. stock market experienced a significant drop after Powell’s remarks. He expressed concerns about the tariffs causing economic damage, stating that there is no modern precedent to guide their assessment. Powell emphasized the importance of monitoring the effects of the tariffs on inflation and unemployment, highlighting the need to keep longer-term inflation expectations stable. The stock market reaction to Powell’s warnings resulted in declines in major indices such as the DJIA, S&P 500, and Nasdaq Composite Index. Market analysts highlighted the potential for increased unemployment and inflation due to the tariffs, with Powell’s statements seen as a clear message to the White House regarding the Fed’s stance on rate cuts. The market experienced fluctuations in various sectors, with technology and consumer discretionary sectors facing significant declines. Companies like Nvidia, Apple, and Tesla, with exposure to international markets and supply chains, saw drops in their stock prices. The overall market sentiment was influenced by concerns over the economic implications of the tariffs and the Fed’s cautious approach to monetary policy adjustments.