# Wall Street drops, Treasury yields gyrate on Fed Chairman Powell’s remarks
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-03-07
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Powell's Hawkish Testimony Sends Stock Markets and
Meta Description: US stocks and Treasury yields fluctuated as Fed Chair Powell's tone raised concerns of higher interest rates, sparking market volatility.
URL: https://financedigest.com/wall-street-drops-treasury-yields-gyrate-on-fed-chairman-powells-remarkshtml

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By Stephen Culp

NEW YORK (Reuters) – U.S. [stocks retreated and benchmark Treasury yields](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling") wavered on Tuesday as Federal Reserve Chairman Jerome Powell commenced his semi-annual, two-day monetary policy testimony before Congress.

All three major U.S. [stock indexes were languid in early trading before Powell’s](https://www.financedigest.com/stocks-dollar-pause-ahead-of-powell-biden-speeches.html "Stocks, dollar pause ahead of Powell, Biden speeches") prepared remarks were released as he sat down to testify before the Senate Banking Committee.

But they headed sharply lower and Treasury yields reversed an early dip after Powell struck a more hawkish tone than investors expected, stoking speculation the central bank could raise interest [rates higher](https://www.financedigest.com/powells-warning-on-higher-u-s-rates-pushes-dollar-to-3-mth-high.html "Powell’s warning on higher U.S. rates pushes dollar to 3-mth high") – and keep them there longer – than market participants might have anticipated.

(Powell is) [stating the obvious – inflation](https://www.financedigest.com/inflation-in-key-german-states-eases-for-second-month.html "Inflation in key German states eases for second month") is stubbornly high,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. He’s very clear that the Fed is going do what it takes to bring core [inflation down to its 2% target](https://www.financedigest.com/the-mouse-that-roared-new-zealand-and-the-worlds-2-inflation-target.html "The mouse that roared: New Zealand and the world’s 2% inflation target") and they’re sticking to that.

Inflation reuters.com/graphics/USA-STOCKS/myvmoaydzvr/inflation.png

![](https://www.globalbankingandfinance.com/wp-content/uploads/2023/03/inflation.jpg)

The market will focus on moderating [inflation one day](https://www.financedigest.com/love-in-a-time-of-inflation-how-much-will-valentines-day-set-you-back.html "Love in a time of inflation: how much will Valentine’s Day set you back?") and the risk of recession on another day,” Ghriskey added. “That results in a lot of volatility.”

The Dow Jones Industrial Average fell 179.49 points, or 0.54%, to 33,251.95, the S&P 500 lost 24.89 points, or 0.61%, to 4,023.53 and the Nasdaq Composite dropped 45.46 points, or 0.39%, to 11,630.28.

[European shares extended their losses after Powell’s prepared remarks](https://www.financedigest.com/european-shares-hit-nine-month-high-dollar-wobbles-after-powell-remarks.html "European shares hit nine month high, dollar wobbles after Powell remarks").

The world is concerned that the [Fed hikes rates](https://www.financedigest.com/wall-street-slips-dollar-gains-as-fed-seen-hiking-rates-in-may.html "Wall Street slips, dollar gains as Fed seen hiking rates in May") so much and so long that the U.S. could [head into recession,”](https://www.financedigest.com/euro-zone-october-pmi-adds-to-evidence-bloc-is-heading-for-recession.html "Euro zone October PMI adds to evidence bloc is heading for recession") Ghriskey said.

The pan-European STOXX 600 index lost 0.60% and MSCI’s gauge of stocks [across the globe](https://www.financedigest.com/sales-of-medical-beds-across-the-globe-are-estimated-to-exceed-us-3000-mn-in-revenues-by-2022-end.html "Sales of Medical Beds Across the Globe are Estimated to Exceed US$ 3,000 Mn in Revenues by 2022-end") shed 0.72%.

Emerging [market stocks](https://www.financedigest.com/stocks-up-bond-yields-fall-as-markets-mull-a-fed-policy-pause.html "Stocks up, bond yields fall as markets mull a Fed policy pause") lost 0.65%. MSCI’s broadest index of Asia-Pacific [shares outside Japan closed 0.6% lower](https://www.financedigest.com/ford-posts-lower-profit-issues-downbeat-outlook-shares-drop.html "Ford posts lower profit, issues downbeat outlook; shares drop"), while Japan’s Nikkei rose 0.25%.

Benchmark [Treasury yields initially headed higher](https://www.financedigest.com/wall-st-indexes-mixed-treasury-yields-tick-up-as-higher-rates-loom.html "Wall St indexes mixed, Treasury yields tick up as higher rates loom") after Powell’s remarks were released but eased as his testimony began in earnest.

Benchmark 10-year [notes last rose 2/32 in price](https://www.financedigest.com/uk-house-prices-end-2022-on-a-weaker-note-after-pandemic-boom.html "UK house prices end 2022 on a weaker note after pandemic boom") to yield 3.9754%, from 3.983% late on Monday.

The 30-year [bond last rose 10/32 in price to yield](https://www.financedigest.com/global-equities-gain-as-rising-bond-yields-pressure-gold.html "Global equities gain, as rising bond yields pressure gold") 3.8932%, from 3.912% late on Monday.

The greenback [gained ground against a basket of world currencies as Powell indicated the Fed](https://www.financedigest.com/asian-shares-gain-as-fears-about-rapid-fed-hikes-bank-crisis-fade.html "Asian shares gain as fears about rapid Fed hikes, bank crisis fade") would stay the course in its efforts to rein in inflation.

The dollar index rose 0.74%, with the euro down 0.72% to $1.0601.

The [Japanese yen](https://www.financedigest.com/japanese-yen-gains-as-ueda-set-to-be-named-next-boj-governor.html "Japanese yen gains as Ueda set to be named next BOJ governor") weakened 0.54% versus the greenback at 136.69 per dollar, while sterling was last trading at $1.1894, down 1.06% on the day.

[Oil prices extended their losses on worries over dampening demand](https://www.financedigest.com/oil-falls-on-demand-worry-as-fed-make-or-break-moment-approaches.html "Oil falls on demand worry as Fed ‘make or break moment’ approaches").

U.S. crude fell 1.37% to $79.36 per barrel and Brent was last at $85.23, down 1.1% on the day.

Gold plunged as central [bank hawkishness stoked fears of higher interest rates](https://www.financedigest.com/bank-of-englands-mann-doubles-down-on-backing-for-rate-hikes.html "Bank of England’s Mann doubles down on backing for rate hikes").

Spot gold dropped 1.4% to $1,821.99 an ounce.

(Reporting by Stephen Culp Additional reporting by Amanda Cooper in London; Editing by Mark Potter)


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