The Dow Jones Industrial Average dropped 1,008.38 points, or 3.03%, to 32,283.40, with losses accelerating into the close.
The S&P 500 fell 3.37% to 4,057.66, and the Nasdaq Composite slid 3.94% to 12,141.71, as Powell talked about the continued fight against inflation.
Speaking at a symposium in Jackson, Wyo., Powell warned that some households and businesses would feel the effects of higher interest rates.
“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,” Powell said in his speech. “These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”
On Thursday, the Bureau of Economic Analysis reported that economic activity contracted less than initially estimated in the second quarter.
The estimate of second-quarter gross domestic product showed the economy contracted at a 0.6% annualized rate, less than 0.9% reported last month.
Additionally, the Labor Department reported that initial jobless claims decreased with 243,000 people filing for unemployment insurance last week, down from 250,000 the previous week.
For the week, the Dow declined 4.2%. The S&P 500 fell 4% and the Nasdaq Composite dropped 4.4%, as major averages slipped for a second straight week.
Friday’s drop wiped out the S&P 500’s August gains and marked the lowest close since July 27.
The Fed has raised rates by substantial and historic increments at its last three policy meetings — a half-point hike in May and a pair of 0.75% hikes in June and July. The next decision will come on Sept. 21, and there will be two more meetings in November and December
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