Federal Reserve Chair Jerome Powell's recent comments on trade risks and economic projections have cast a shadow over investor sentiment, despite the Fed's anticipated rate cut. The market's cautious reaction reflects concerns about potential policy changes, including tariffs, which could introduce volatility and affect international competitiveness. Small-cap stocks, particularly sensitive to interest rates, have been notably impacted, experiencing a 2.6% decline. Additionally, the recent rally led by Tesla and the Magnificent Seven appears to be undergoing a natural pullback, contributing to the broader market's downward pressure.
The Invesco S&P 500 Equal Weight ETF (RSP) experienced a decline, falling 2.58% to $175.49 by 4:00 PM on Wednesday, December 18.