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Stocks move lower on economic data, Powell remarks

An American flag flies outside NYSE in 2018.

An American flag flies outside NYSE in 2018. Photo Credit: AP / Mary Altaffer

Technology and internet companies led a broad slide for U.S. stocks Tuesday after discouraging economic data and cautionary remarks from the head of the Federal Reserve weighed on the market.

The sell-off marked the third straight loss for the market and the biggest drop this month for the Dow Jones Industrial Average and the S&P 500 index, which hit an all-time high only last week.

In an early afternoon speech, Fed chairman Jerome Powell noted that the economic outlook has become cloudier since early May amid uncertainty over trade and global growth. Earlier Tuesday, reports showed a decline in consumer confidence and more weakness in the housing market.

Powell said the Fed is reassessing its interest rate policy, though he did not commit to a rate cut. Separate comments from James Bullard, president of the Fed's St. Louis regional bank, may have put a damper on the market's expectations for big rate cut.

In an interview with Bloomberg Television, Bullard said a half-point rate cut — which many investors have been expecting — would be "overdone," adding that a quarter-point cut would suffice to shield the economy from a slowdown.

"The risk is to the downside if they don't cut [rates] when the markets are fully expecting it," said Randy Frederick, vice president of trading & derivatives at Charles Schwab.

The S&P 500 index fell 1 percent to 2,917.38. The benchmark index is about 1.3 percent below the record high it set on Thursday.The Dow dropped 179.32 points, or 0.7 percent, to 26,548.22. The Nasdaq composite, which is heavily weighted with technology stocks, slid 1.5 percent to 7,884.72.


 

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