Market Reaction to Fed's Announcement

US markets experienced a significant reversal from earlier gains on Wednesday following Federal Reserve Chair Jerome Powell's indication that interest rate cuts are not on the horizon. This announcement led to a sharp decline in the Dow, which fell as much as 360 points.

Powell's Remarks on Future Decisions

Powell emphasized that the Fed has "made no decisions about September yet" and expressed uncertainty about whether upcoming data would support a rate cut, stating it's "hard to say" how clear the data will be.

Impact of Tariffs and Inflation

He also highlighted the role of tariffs in driving up prices, while dismissing concerns over US debt costs. Powell reiterated the Fed's commitment to anchoring longer-term inflation expectations and preventing a temporary price increase from escalating into a persistent inflation issue.

Market Performance

By 3:06 pm ET, the Dow Jones had dropped 0.80%, or 360 points, with the Nasdaq 100 and S&P 500 also experiencing declines. The euro weakened against the dollar, losing 1.12% to trade at $1.14168.