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Investing.com — U.S. stock markets reversed early indications of a rebound to open lower Wednesday, after Federal Reserve Chairman Jerome Powell downplayed the prospect of cutting official interest rates below zero and warned of the risk of long-term damage to the economy from the Covid-19 pandemic.
By 9:35 AM ET (1335 GMT), the Dow Jones Industrial Average was down 262 points, or 1.1% at 23,502 points. The S&P 500 was down 0.9% while the Nasdaq Composite was down 0.7%.
Powell said in a teleconference Q&A with the Peterson Institute of International Economics that data concerning the effectiveness of negative rates was “very mixed”.
“For now, it’s not something that we’re looking at. We think we have a very good toolkit,” Powell said.
Powell’s comments set his institution up for more criticism from President Donald Trump, who urged the Fed to cut below zero on Tuesday via his Twitter feed. However, opinion at the central bank seems solidly behind Powell, in as much as none of the seven colleagues on the Federal Open Markets Committee to have spoken this week have supported the idea.
