Federal Reserve Chair Jerome Powell's recent comments on trade risks and economic projections have cast a shadow over investor sentiment, leading to a cautious market reaction despite the Fed's anticipated rate cut. The S&P 500 Index has been under pressure, with small-cap stocks particularly affected due to their sensitivity to interest rates. The recent rally led by Tesla and the Magnificent Seven is experiencing a natural pullback, contributing to the broader market's decline. Additionally, Powell's acknowledgment of potential policy changes, including tariffs, has introduced uncertainty, potentially increasing volatility as companies navigate these challenges.
The iShares Core S&P 500 ETF (IVV) experienced a decline, falling 2.40% to $590.51 by 4:00 PM on Wednesday, December 18.