US Stocks Reverse Gains on Fed Chair Inflation Remarks – US Market Wrap

Stocks fell after Federal Reserve Chair Powell warned that tariff-driven economic uncertainty and inflation risk posed new challenges to the central bank’s efforts to ease monetary policy. Bond gains waned.

Equities closed little changed, with the S&P 500 falling below 6,000 after briefly exceeding that level. Treasury two-year yields, which are more sensitive to upcoming Fed moves, nearly reversed a seven-basis-point decline. The dollar barely moved.

Fed officials kept rates unchanged and planned two rate cuts in 2025. Officials also reduced their estimates for this year’s economic growth while raising their forecasts for unemployment and inflation. Powell noted that tariff increases are likely to raise prices, but that the effects on inflation may be longer-lasting. He also declined to say whether he would stay after his term ended.

Traders also kept a close eye on geopolitical developments, with Trump announcing another meeting Wednesday to discuss the Middle East conflict.