U.S. Stocks Plunge 3% as Powell Warns of Tariff Impact

On April 16, U.S. stock markets experienced a significant sell-off following hawkish remarks by Federal Reserve Chairman Jerome Powell. The Nasdaq Composite Index led the decline, falling by more than 3%.

Powell's speech at the Chicago Economic Club highlighted the potential challenges posed by the Trump administration's tariff policies. He warned that these policies could force the Federal Reserve into a difficult position, balancing the need to control inflation against the goal of supporting economic growth. Powell noted that the uncertainty surrounding the impact of tariffs was increasing, leading to a potential scenario where inflation rises while economic growth slows.

Powell emphasized that the Federal Reserve's dual mandate—maintaining price stability and achieving maximum employment—could come into conflict. He stated that if inflation and employment targets diverge, the Fed might prioritize controlling inflation, as price stability is essential for achieving long-term economic goals.

During the Q&A session following his speech, Powell reiterated that tariffs could push the Fed further away from its targets for the remainder of the year. He acknowledged that tariffs would likely cause a temporary increase in inflation, with the potential for more lasting effects depending on the scale of the tariffs and their impact on prices.

The tech sector, particularly the semiconductor industry, was hit hard by Powell's remarks. Nvidia, a leading chipmaker, saw its stock price plummet by 6.9%, resulting in a significant loss in market capitalization. Other major tech stocks, including Apple, Microsoft, and Tesla, also experienced notable declines.

Chinese tech stocks listed on U.S. exchanges also faced a broad sell-off. The Nasdaq Golden Dragon China Index fell by 2.72%, with major players like Alibaba, JD.com, and Tencent Music experiencing significant drops.