CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

Dow Jones down 180 points after Powell speech on interest rates

The Dow Jones plummets after Fed Chair Jerome Powell speaks about patience on rate cuts.

The Dow Jones fell by almost 180 points after US Federal Reserve chair, Jerome Powell, gave a speech that didn’t signal that the Fed would reduce interest rates. Investors were hoping that the Fed would cut interest rates in July after keeping rates steady in June.

Powell stresses patience in implementing rate cuts

In a speech at the Council of Foreign Relations, Powell said that the Federal Open Market Committee [FOMC] members would take a ‘wait-and-see’ approach to reducing interest rates.

‘Since the beginning of the year, we had been taking a patience stance toward assessing the need for any policy change. We now state that the [Federal Open Market] Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion,’ said Powell.

Powell speaks about Fed’s independence from politics and US stock market

Powell asserted that the Fed’s policy on interest rates won’t be driven by the US stock market or political pressure.

‘Many FOMC participants judge that the case for somewhat more accommodative policy has strengthened. But we are also mindful that monetary policy should not overreact to any individual data point or short-term swing in sentiment,’ said Powell.

‘Congress chose to insulate the Fed this way because it had seen the damage that often arises when policy bends to short-term political interests,’ added Powell.

Investors were also worried after James Bullard, St. Louis Federal Reserve Bank President, said that a half-point rate cut would be ‘overdone.’

What do economic experts say about the Dow Jones?

Art Hogan, chief market strategist at investment firm National Securities, said that Powell and Bullard’s comments were doubly disappointing to investors.

‘You had a one-two punch. Powell came out and warned against policy bending to short-term political interests, but it is also Bullard, who is a dissenter, saying 50 basis points would be too much,’ said Hogan.

While much of Wall Street is concerned about Powell’s comments, Rick Meckler, partner at Cherry Lane Investment, says the upcoming US-China trade talks could have a greater impact on the Dow Jones.

‘The [US stock] market is really looking at two issues that push it higher. One is the trade agreement and the other is Fed policy. It's really trade policy that's going to be more meaningful,’ said Meckler.

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Seize your opportunity

Deal on the world’s stock indices today.

  • Trade on rising or falling markets
  • Get one-point spreads on the FTSE 100
  • Unrivalled 24-hour pricing

See opportunity on an index?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See opportunity on an index?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from one point on the FTSE 100
  • Trade more 24-hour indices than any other provider
  • Analyse and deal seamlessly on smart, fast charts

See opportunity on an index?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.