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US Stocks Tumble After Yellen’s Remarks and Powell’s Statement


On Wednesday, the US stock market experienced a significant downturn as investors were hit with a double dose of stress. Treasury Secretary Janet Yellen’s remarks on the state of the banking system rattled bank shares, while Federal Reserve Chairman Jerome Powell dashed hopes for rate cuts shortly. This sent the financial sector into a tailspin and weighed on the broader stock indexes.

During her testimony to lawmakers, Yellen stated that the government is not considering providing “blanket” deposit insurance to stabilize the banking system. This sent financial shares plummeting and caused broader stock indexes to suffer as a result. Investors were already on edge due to inflation concerns and rising interest rates, and Yellen’s remarks fueled the fire.

Adding to investors’ concerns, Powell also stated that he is prepared to keep tightening until inflation shows signs of cooling. The market had initially risen as the Fed delivered the expected 25 basis-point hikes and kept its year-end rate projection intact. However, Powell’s comments caused the market to give up its gains and turn negative.

In a broad-based selloff, the S&P 500 erased a rally that had approached 1% and finished the day with a 1.7% slide. All eleven sectors of the S&P 500 stayed in negative territory, indicating a pessimistic market mood. It’s worth noting that all 22 stocks in the KBW Bank Index retreated, with the measure of US financial heavyweights down almost 5%.

Main Pairs Movement

On Wednesday, the US Dollar experienced a significant drop to its lowest level in almost seven weeks after the Federal Reserve raised interest rates as expected. However, a change in the bank’s language indicated a potential policy shift that could lead to the bank reaching its terminal rate sooner than expected. As a result, the DXY index fell by almost 0.8% and closed at a level of 102.54.

The EURUSD pair surged by 0.82% on a daily basis after the President of the European Central Bank, Christine Lagarde, mentioned that underlying inflation dynamics remain strong and that they have not committed to raising interest rates further or finished hiking. The pair rallied dramatically following the Fed’s interest rate decision and closed at a level of 1.0856 on Wednesday. Meanwhile, the GBPUSD pair earned a 0.42% daily gain and closed at a level of 1.2262.

Gold also experienced a significant gain of 1.55% on Wednesday as US Treasury Secretary Janet Yellen’s comments suggested no out-of-the-line support for United States banks, which seemed to weigh on Treasury bond yields and propel the XAU/USD price. The yellow metal surged with a 1.26% daily gain and closed at the $1970 mark for the day.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
USDFOMC Economic Projections02:00N/A
USDFed Interest Rate Decision02:005.00%
USDFOMC Press Conference02:30N/A
CHFSNB Interest Rate Decision (Q1)16:301.50%
CHFSNB Monetary Policy Assessment16:30N/A
CHFSNB Press Conference17:00N/A
EUREU Leaders Summit18:00N/A
GBPBOE Inflation LetterTentativveN/A
GBPBoE Interest Rate Decision (Mar)20:004.25%
GBPBoE MPC Meeting Minutes20:00N/A
USDBuilding Permits20:00N/A
USDInitial Jobless Claims20:30197K
USDNew Home Sales (Feb)22:00650K