Stocks erased gains amid a selloff in giant technology companies and Federal Reserve Chairman Jerome Powell’s remarks over an uncertain economic rebound without further stimulus.
The S&P 500 initially jumped as the Fed signaled it would hold rates near zero through at least 2023. The rally quickly fizzled out after Powell said he’s not sure if the faster-than-expected recovery will continue. A tumble in tech behemoths such as Apple and Facebook also dragged down the gauge. The Treasury yield curve steepened as the U.S. central bank stopped short of offering new specifics on its approach to the monthly bond purchases that have buttressed markets. Some traders might have been expecting signals regarding plans to target longer maturities.
Fed officials have stressed in recent weeks that the U.S. recovery is highly dependent on the nation’s ability to better control the coronavirus, and that further fiscal stimulus is likely needed to support jobs and incomes. “The recovery has progressed more quickly than generally expected,” Powell said, while cautioning that “the path ahead remains highly uncertain.”