The S&P 500 (SPX) has fallen to an intraday low after Fed Chair Jerome Powell said that stock prices are “fairly highly valued” and elevated compared to historical levels in a speech in Rhode Island on Tuesday. The benchmark index has returned nearly 35% since the April lows caused by President Trump’s tariff policies.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Tariffs remain a concern for the market, with Powell’s base case indicating a one-time pass-through that will conclude by the end of 2026.
Powell Warns of Inflation and Labor Market Risks
Powell also warned of the risks of both inflation and a weakening labor market. “Two-sided risks mean that there is no risk-free path,” he said. Lowering rates too quickly could result in higher inflation, while higher rates could have negative effects for the labor market. The Fed’s dual mandate is to keep inflation under control while maximizing employment.
Last week, the Fed lowered rates by 25 bps, with Powell calling the decision a “risk management” move in order to address labor market risks.
Stay ahead of macro events with our up-to-the-minute Economic Calendar — filter by impact, country, and more.