U.S. stock-index futures plunged Sunday, after Wall Street sank Friday following hawkish comments from Federal Reserve Chairman Jerome Powell that the fight against stubborn inflation would continue, and be painful.
Speaking Friday at Jackson Hole, Wyo., Powell said the Fed is committed to taming inflation, which is at 40-year-highs. “While higher interest rates, slower growth and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” he said. He added that the Fed has an “overarching focus right now to bring inflation back down to our 2% goal.”
Powell also kept the door open for a 75-basis-point interest-rate hike in September, even if the next inflation report is softer than feared.
That disappointed Wall Street, which had been holding out hope for a dovish “Fed pivot.”
On Friday, the Dow Jones Industrial Average DJIA, -3.03% plunged 1,008.38 points, or 3%, to close at 32,283.40, in its largest percentage drop since May 18. The S&P 500 SPX, -3.37% dropped 141.46 points, or 3.4%, to finish at 4,057.66, in its biggest percentage decline since June 13, and the Nasdaq Composite COMP, -3.94% tumbled 497.56 points, or 3.9%, to end at 12,141.71, in its largest percentage drop since June 16.
Meanwhile, crude prices CL.1, +1.20% jumped more than $1, to about $94.17 a barrel Sunday evening.