By 12:40 p.m. ET (18:40 GMT), the technology-heavy Nasdaq Composite index was down 1.6% at 15,534. The S&P 500, which groups the top 500 US stocks, fell 1.6% to 4,583 while the Dow Jones Industrial Average, which groups mostly industrial stocks, lost 1.7% to hover at 34,547.
In his testimony before the US Senate, Powell said the Federal Reserve might end its pandemic-era stimulus support for the US economy faster than anticipated due to high inflationary pressures and relatively strong growth.
“At this point, the economy is very strong and inflationary pressures are high and it is therefore appropriate in my view to consider wrapping up the paper of our asset purchases, which we actually announced at the November meeting, perhaps a few months sooner,” Powell said.
Beginning this month, the Federal Reserve is scheduled to taper $15 billion each month from its monthly purchase of $120 billion of assets under the economic stimulus program it has carried since the first major outbreak of the coronavirus pandemic in 2020. The central bank said it has also planned its first rate hike after the stimulus rollback.