Investors have historically relied on the Federal Reserve to intervene during market crises, but Chair Jerome Powell emphasized that current economic conditions, driven by unexpected tariffs, warrant a careful approach. The markets are currently undergoing a correction, with the S&P 500 nearing a 20% decline that would signify a bear market. Powell's stance indicates that immediate Fed action is improbable, heightening concerns among investors as market momentum continues to decline and the prospects for recovery remain uncertain.
The likelihood of further market declines is much greater than the chance that the Fed will turn the markets around in the immediate future.
The tariffs are much larger than expected, and their immense scale makes it especially important for the central bank to understand their economic effects.
What U.S. stock investors have experienced until now is what's known on Wall Street as a correction — a decline of 10 percent or more.
For the S&P 500, which closed at 5,074.08, a bear market is already within shouting distance, a scant 2.6 percentage points away.
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