Stocks sink as Fed Chair Jerome Powell promises 'forceful and rapid' action on inflation

By CNN Business

Updated 12:35 p.m. ET, August 27, 2022
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4:18 p.m. ET, August 26, 2022

Dow plunges more than 1,000 points following Fed comments

CNN Business' Nicole Goodkind

(John Minchillo/AP)
(John Minchillo/AP)

US stocks plummeted on Friday following a warning from Federal Reserve Chair Jerome Powell that the central bank will not end its fight against rapid inflation anytime soon.  

Powell’s comments weighed on investors, who grappled with what more aggressive interest rate hikes might mean for the health of the economy. 

For the week, the Dow fell by 4.2%. The S&P 500 and Nasdaq Composite were down 4% and 4.4%, respectively. 

As stocks settle after the trading day, levels might still change slightly.

3:18 p.m. ET, August 26, 2022

Dow now down nearly 900 points

From CNN Business' Paul R. La Monica

There was nowhere to run to and nowhere to hide on Wall Street Friday. The Dow plunged nearly 900 points in late afternoon trading. All 30 stocks were in the red. The S&P 500 and Nasdaq sank, too, plummeting 3% and 3.5% respectively.

The reason for the sell-off? Federal Reserve chair Jerome Powell didn't sound all that dovish about future interest rate hikes during his speech in Jackson Hole Friday. The odds of another big rate hike (three-quarters of a point versus a half-point) at the Fed's next meeting on September 21 shot up following his comments.

Powell even mentioned that there could be some "pain" for consumers and businesses as the Fed uses higher rates to fight inflation.

1:56 p.m. ET, August 26, 2022

Dow sinks 600 points

From CNN Business' David Goldman

A New York Stock Exchange trader watches Jerome Powell speaking at the Jackson Hole Economic Policy Symposium on Friday.
A New York Stock Exchange trader watches Jerome Powell speaking at the Jackson Hole Economic Policy Symposium on Friday. (Michael Nagle/Bloomberg/Getty Images)

The stock market continued to sink sharply after Federal Reserve Chairman Jerome Powell on Friday spooked investors by signaling policymakers would fight inflation with more historic rate hikes. He warned the US economy could feel some "pain" as the Fed works to slow the pace of surging prices.

The Dow fell 600 points, or 1.8%.

The S&P 500 fell 2.2%.

The Nasdaq fell 2.7%.

11:09 a.m. ET, August 26, 2022

Dow sinks 500 points

From CNN Business' David Goldman

The Dow tumbled after Federal Reserve Chairman Jerome Powell declared Friday an all-out fight against inflation -- even hinting that the Fed might not let up if it sends the US economy into a recession.

The Dow fell 500 points, or 1.5%.

The S&P 500 fell 1.8%.

The Nasdaq fell 2.3%.

11:08 a.m. ET, August 26, 2022

Fed chairman Jerome Powell says Fed's fight to tame inflation is 'unconditional'

From CNN Business' Martha White

The Grand Tetons rise above the clouds in Grand Teton National Park where financial leaders from around the world are gathering for the Jackson Hole Economic Symposium, outside Jackson, Wyoming, on August 25.
The Grand Tetons rise above the clouds in Grand Teton National Park where financial leaders from around the world are gathering for the Jackson Hole Economic Symposium, outside Jackson, Wyoming, on August 25. (Jim Urquhart/Reuters)

At the Federal Reserve's annual Jackson Hole Economic Symposium, chairman Jerome Powell telegraphed a greater sense of urgency about taming inflation than he has in previous remarks, calling price stability "the bedrock of our economy."

In his keynote speech Friday morning, Powell said that the central bank's "overarching focus" was on controlling rampant inflation.

"Our responsibility to deliver price stability is unconditional," he said.

While Powell did not offer any indication whether the Fed's extraordinary back-to-back rate hikes of 75 basis points each would be repeated at its rate-setting meeting next month, he sent the clearest message yet that the central bank was unequivocally committed to more restrictive policy in order to rein in inflation.

Powell added that the path to reducing inflation would not be quick or easy, saying that the task, "requires using our tools forcefully to bring demand and supply into better balance."

Read more

10:51 a.m. ET, August 26, 2022

Stocks take a dive

From CNN Business' David Goldman

After Wall Street had some to digest Federal Reserve Chairman Jerome Powell's comments at the Jackson Hole Economic Symposium, investors have made their decision: They're unhappy.

Powell told investors to expect economic pain in the future, hinting at a possible recession. He also said, however, the Fed was laser-focused on inflation and would continue its historic pace of rate hikes for the forseeable future.

The Dow fell 400 points, or 1.2%.

The S&P 500 fell 1.4%.

The Nasdaq fell 1.8%.

10:22 a.m. ET, August 26, 2022

Stocks bounce around, looking for clues from Powell's speech

From CNN Business' David Goldman

Jerome Powell during his opening remarks at the Jackson Hole Economic Symposium today.
Jerome Powell during his opening remarks at the Jackson Hole Economic Symposium today. (Kansas City Fed)

Investors hoping for dovish comments from Federal Reserve Chairman Jerome Powell Friday were disappointed. Instead, Powell mentioned "pain" twice when predicting the future of the US economy.

"While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses," Powell said. "These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain."

Powell hinted the Fed will continue its historic pace of rate hikes for the foreseeable future until it can return inflation to normal levels.

"We are taking forceful and rapid steps to moderate demand so that it comes into better alignment with supply, and to keep inflation expectations anchored," he said. "We will keep at it until we are confident the job is done."

Stocks danced around, dipping, then rising, then falling again as Wall Street digested Powell's comments.

The Dow was last down 80 points, or 0.2%.

The S&P 500 fell 0.3%.

The Nasdaq fell 0.4%.

9:59 a.m. ET, August 26, 2022

Jerome Powell, ultra-hawk?

CNN Business' Nicole Goodkind

Jerome Powell, chair of the Federal Reserve, and his wife Elissa Leonard attend a dinner program at Grand Teton National Park where financial leaders from around the world are gathering for the Jackson Hole Economic Symposium outside Jackson, Wyoming, on August 25.
Jerome Powell, chair of the Federal Reserve, and his wife Elissa Leonard attend a dinner program at Grand Teton National Park where financial leaders from around the world are gathering for the Jackson Hole Economic Symposium outside Jackson, Wyoming, on August 25. (Jim Urquhart/Reuters)

Could Jerome Powell surprise markets and send an ultra-hawkish message at his Jackson Hole speech? Hedge fund managers are betting he will signal large interest rate hikes are coming.

The bet came following news that officials from both the St. Louis and Minneapolis Fed branches voted in favor of a full point hike of the Fed's discount rate in July. The discount rate measures banks’ cost to borrow directly from the Fed and has so far stayed in step with the main rate.

9:34 a.m. ET, August 26, 2022

Stocks open lower as investors await Jackson Hole speech

CNN Business' Nicole Goodkind

Traders work on the floor of the New York Stock Exchange during afternoon trading on August 22.
Traders work on the floor of the New York Stock Exchange during afternoon trading on August 22. (Michael M. Santiago/Getty Images)

US stocks opened lower on Friday morning as investors prepare for Federal Reserve Chair Jerome Powell’s 10 am speech from Jackson Hole at the central bank’s annual symposium.  

The personal consumption expenditures data, one of the Fed’s favorite inflation measures, showed that the pace of rising prices eased in July. 

The Dow was flat on Friday morning.

The S&P 500 dropped 0.1%.

The Nasdaq Composite was down by 0.2%.