U.S. Stocks Mostly Lower Following Powell Comments

After coming under pressure early in the session, stocks have fluctuated over the course of morning trading on Wednesday but largely maintained a negative bias. The major averages are extending the sharp pullback seen late in the previous session.

Currently, the major averages are all in negative territory, although the Nasdaq is down just 6.92 points or 0.1 percent at 8,995.63. The Dow is down 221.17 points or 0.9 percent at 23,543.61 and the S&P 500 is down 16.43 points or 0.6 percent at 2,853.69.

The weakness on Wall Street comes as traders react to comments from Federal Reserve Chair Jerome Powell, who said the central bank may take additional steps to support the economy but is not considering adopting negative interest rates.

“At the Fed, we will continue to use our tools to their fullest until the crisis has passed and the economic recovery is well under way,” Powell said during a webcast hosted by the Peterson Institute for International Economics.

However, Powell signaled the Fed remains reluctant to impose negative interest rates, which President Donald Trump has repeatedly called on the central bank to enact.

“I know there are fans of the policy, but for now it’s not something that we’re considering,” Powell said. “We think we have a good toolkit and that’s the one that we will be using.”

The Fed Chief noted the economic outlook is “both highly uncertain and subject to significant downside risks” and suggested it may be necessary for Congress to provide additional stimulus.

Powell’s comments come a day after House Democrats unveiled a new $3 trillion coronavirus relief bill that is likely to face considerable opposition in the Republican-led Senate.

Despite the negative bias for the markets, strong gains by Netflix (NFLX) and Amazon (AMZN) have helped to limit the downside for the tech-heavy Nasdaq.

Energy stocks are turning in some of the market’s worst performances, as the price of crude oil has turned lower after initially spiking in reaction to the latest inventory data. Crude for June delivery is currently slipping $0.21 to $25.57 a barrel.

Reflecting the weakness in the sector, the Philadelphia Oil Service Index has plunged by 6.5 percent, the NYSE Arca Natural Gas Index is down by 4.5 percent and the NYSE Arca Oil Index is down by 3.8 percent.

Substantial weakness is also visible among banking stocks, which are extending the sell-off seen in the previous session. The KBW Bank Index has slumped by 4 percent to its lowest intraday level in over a month.

Networking, housing and steel stocks are also seeing considerable weakness, while gold stocks have moved notably higher along with the price of the precious metal.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index fell by 0.5 percent, while China’s Shanghai Composite Index edged up by 0.2 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.’s FTSE 100 Index has slumped by 1.2 percent, the German DAX Index and the French CAC 40 Index are down by 2.1 percent and 2.4 percent, respectively.

In the bond market, treasuries are extending the upward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.5 basis points at 0.653 percent.

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