After Federal Reserve Chair Jerome Powell stated in his Jackson Hole Speech that the central bank wouldn’t relent in its fight against high inflation, stocks fell dramatically on Friday. The Dow Jones Industrial Average initially oscillated throughout the remarks of the Fed chair before falling 611 points, or 1.85%, to its lowest level. The Nasdaq Composite dropped 2.71%, while the S&P 500 dropped 2.18%.
These actions come after the Fed chair gave a hawkish Speech underlined the Fed’s tough stance against inflation, which prompted investors to consider the long-term effects of increased interest rates. Maintaining a restrictive stance on policy for a while is likely necessary to restore price stability. The historical evidence advises against easing policy too soon, Powell said. The personal consumption expenditures data, one of the Fed’s preferred inflation indicators, revealed Friday that price increases slowed down in July.
In the broader market index, the best-performing industries were utilities and energy. Following the consumer lending company’s release of subpar full-year revenue guidance, shares of Affirm fell 22%. The major indices were on track for their second consecutive week of declines. The Dow is expected to drop by 2.9%. Losses of approximately 2.8% and 3.2% are expected for the S&P 500 and Nasdaq Composite, respectively.