Wall Street falls after Powell vows 'aggressive' inflation action

Wall Street slid on Monday, dipping deeper into negative territory after US Federal Reserve Chairman Jerome Powell suggested a more aggressive tightening of monetary policy than previously anticipated, adding to ongoing uncertainties regarding the Russian invasion of Ukraine.

All three major US stock indexes were poised to snap their four-session winning streaks on the heels of their best weekly percentage gains since early November 2020.

Powell said the central bank must move "expeditiously" to combat inflation, in remarks before the National Association of Business Economics conference, adding that bigger-than-usual interest rate hikes could be deployed, if needed.

Referring to Powell's comments that inflation is "much too high," Oliver Pursche, senior vice president at Wealthspire Advisors in New York, said "three months ago, it was 'transitory,' a month ago it was 'elevated.' That's a hell of a progression."

"And the market is trying to figure it out, what those statements mean as it pertains to interest rate hikes and whether it increases the likelihood of a couple of 50 basis-point hikes down the road," Pursche added.

Also read: Fed will raise interest rates more aggressively if needed, Powell says

Fed funds futures now imply a 60.7 per cent chance of a 50 basis-point hike in key interest rates at the Fed's next meeting in May, up from 52 per cent before the text of Powell's speech was released.

Fighting raged on in Ukraine as efforts to negotiate an end to the conflict appeared to be making little progress.

Crude prices continued to surge as the European Union weighed joining the United States in banning Russian oil, which raised supply concerns and helped put energy shares out front.

The Dow Jones Industrial Average fell 323.21 points, or 0.93 per cent, to 34,431.72, the S&P 500 lost 21.81 points, or 0.49 per cent, to 4,441.31 and the Nasdaq Composite dropped 142.76 points, or 1.03 per cent, to 13,751.08.

Of the 11 major sectors in the S&P 500, energy was the clear winner, with communication services suffering the biggest percentage loss.

Shares of Boeing Co slid 4.1 per cent after one of its 737-800 aircraft operated by China Eastern Airlines crashed in southern China with no apparent survivors.

The rising geopolitical temperature helped defense stocks. Despite Boeing's decline, the S&P 500 Aerospace and Defense index rose 1.1 per cent with Lockheed Martin, Raytheon, Northrop Grumman and General Dynamics up between 2 per cent and 4 per cent.

A Moscow court labeled Meta Platforms Inc an "extremist organisation," upholding a decision to ban Facebook in Russia. Meta's shares were down 2.9 per cent.

Alleghany Corp surged 24.3 per cent after Warren Buffett's Berkshire Hathaway Inc struck an $11.6 billion deal to buy the owner of reinsurer TransRe.

Declining issues outnumbered advancing ones on the NYSE by a 1.67-to-1 ratio; on Nasdaq, a 1.91-to-1 ratio favored decliners.

The S&P 500 posted 36 new 52-week highs and no new lows; the Nasdaq Composite recorded 45 new highs and 35 new lows.

Check out DH's latest videos