US stocks closed mixed on Wednesday after Federal Reserve Chair Jerome Powell said the economy is in a solid position and tempered expectations of a rate cut in September.
The Dow closed lower by 172 points, or 0.38%. The S&P 500 dropped 0.12%. Meanwhile, the Nasdaq gained 0.15%.
Stocks were modestly higher before Powell’s press conference. The Dow and S&P 500 tumbled into the red as Powell spoke about the difficulty of gauging how tariffs might impact inflation.
“A pretty reasonable base case is that this will be a one-time price increase, and in the end, we’ll make sure that that’s the case,” Powell said. “We’re just trying to do that efficiently, and efficiently means getting the timing right.”
“If we cut rates too soon, maybe we didn’t finish the job with inflation. History is dotted with examples of that,” Powell said. “If you cut too late, then maybe you’re doing unnecessary damage to the labor market.”
Traders’ expectations of rate cuts in September dropped to 45%, according to the CME FedWatch Tool. That’s down from 63% yesterday.
The Fed will have two sets of inflation and jobs reports to dissect before its next rate decision in mid-September.
“The September meeting will now prove to be pivotable in terms of its way forward for monetary policy,” JoAnne Bianco, senior investment strategist at BondBloxx, said in an email.
