Stocks Sink As Powell Dismisses 'Fed Put' Safety Net, Gold Extends Massive Lead Over Nasdaq
Risk sentiment took a sharp blow Wednesday afternoon after Federal Reserve Chair Jerome Powell linked rising tariffs to higher inflation and slower growth, while making it clear the central bank has no intention of cushioning market losses.
In remarks at the Economic Club of Chicago, Powell said the inflationary effects of tariffs could be more persistent than previously thought, and warned that current policy uncertainty makes it difficult to gauge their full impact.
Most notably for Wall Street, Powell addressed the notion of a so-called "Fed put"—the belief that the central bank would intervene if markets drop sharply—and offered a blunt response: "I'm going to say no."
That single line pushed traders to recalibrate expectations for any near-term monetary support.
Stocks Tumble As Chipmakers Extend Losses
By 3:15 p.m. ET, the S&P 500 – as tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) – had dropped 3.1% to 5,230 points, while the Nasdaq 100 – tracked by the Invesco QQQ Trust (NASDAQ:QQQ) plunged 4.1% to 18,050, dragged down by the tech-heavy weighting of the index.
The Dow Jones Industrial Average shed 838 points, or 2.1%, and the Russell 2000 small-cap index also fell 2.1%.
Nearly every sector turned red, with the Technology Select Sector SPDR Fund (NYSE:XLK) nosediving 5%. Energy stocks were the sole exception, buoyed by higher crude prices and safe-haven commodity demand.
Semiconductors were particularly hard hit following fresh export restrictions on Nvidia Corp. (NASDAQ:NVDA) chips to China.
The iShares Semiconductor ETF (NASDAQ:SOXX) plummeted 6.8%, with Nvidia and Advanced Micro Devices Inc. (NASDAQ:AMD) both down around 10%.
Gold Shines In Flight To Safety
As stocks tumbled, gold prices climbed, continuing their powerful 2025 rally. The precious metal hit new record highs, rising to over $2,350 an ounce, and is now up 26% year to date.
With the Nasdaq 100 down 23% over the same period, gold has outperformed the tech index by nearly 50% in less than four months.
Gold's appeal has grown amid mounting inflation concerns, policy uncertainty, and geopolitical tension.
Powell: No Market Rescue This Time
Powell's refusal to endorse the "Fed put" marked a sharp shift in tone from the central bank's more accommodative stance in past downturns. While he acknowledged market volatility, he said both equity and bond markets were "functioning" and "orderly."
"Markets are struggling with a lot of uncertainty, and that means volatility," Powell said. "But having said that, markets are functioning."
The Fed chair emphasized that rate decisions will continue to focus on economic data, especially inflation and employment, and not on asset prices.
Top S&P 500 Gainers:
| Name | Last | Chg % |
|---|---|---|
| Abbott Laboratories (NYSE:ABT) | 129.93 | +2.94% |
| APA Corporation (NYSE:APA) | 15.27 | +2.52% |
| Devon Energy Corp. (NYSE:DVN) | 29.21 | +2.40% |
| Newmont Corp. (NYSE:NEM) | 55.88 | +2.37% |
| Diamondback Energy Inc. (NYSE:FANG) | 129.98 | +2.23% |
Top S&P 500 Losers:
| Name | Last | Chg % |
|---|---|---|
| Advanced Micro Devices Inc. | 85.90 | -9.86% |
| Nvidia Corp. | 101.25 | -9.76% |
| J.B. Hunt Transport Services Inc. (NYSE:JBHT) | 123.21 | -8.81% |
| Palantir Technologies Inc. (NASDAQ:PLTR) | 89.90 | -8.63% |
| KLA Corp. (NASDAQ:KLAC) | 622.99 | -7.87% |
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