Federal Reserve Chairman Jerome Powell on Friday signaled that policymakers won't rush to offset the impact of Trump tariffs because "the economy is still in a good place," even as he acknowledged high uncertainty and growing downside risks. Powell's remarks did little to stem today's S&P 500 slide deeper into correction territory and may have even further rattled Wall Street.
While the next Fed meeting is still just over a month away, and things could change, Powell clearly doesn't want to create an expectation of a rate cut. Yet he gave investors some reason to worry that the Fed might stay on hold either due to inflation concerns or because a big tax cut is coming later this year.
11:55 a.m. ET
Powell: Don't Expect Fed To Cut On May 7
"It feels like we don't need to be in a hurry," Powell said. "Inflation is going to be moving up and growth is going to be slowing," Powell said, but the appropriate path for monetary policy isn't clear.
11:46 a.m. ET
Fed Eyes Tariff Negotiations, Retaliation
"We're watching to see what the policies will be," Powell said.
Powell isn't basing Fed policy decisions on President Trump's reciprocal tariffs, auto tariffs and the rest. Reading between the lines, he thinks there's a good chance they will change.
"It will be very difficult to assess the likely economic effects of higher tariffs until there is greater certainty about the details, such as what will be tariffed, at what level and for what duration, and the extent of retaliation from our trading partners," he said.
The S&P 500 is down 4%.
11:40 a.m. ET
Fed Chief Hedges On Inflation
Powell spoke about tariff inflation being "transitory" after the March 19 Fed meeting, but his message changed a little in today's speech. Powell said that it is "possible that the effects could be more persistent." The Fed's job is "to make certain that a one-time increase in the price level does not become an ongoing inflation problem."
Powell said that the employment data, though reassuring, was based on March 12 surveys, "roughly a month ago."
11:33 a.m. ET
Stocks Resume Selling On Wait-And-See Powell
The S&P 500, which had narrowed Friday's loss to less than 3% before Powell's speech, is now down 4%. The 10-year Treasury yield is at 3.94%.
11:27 a.m. ET
Trump Tariffs Surprised Powell
Following Trump's executive order on reciprocal tariffs on Wednesday, Powell said that tariff increases will be "significantly higher than expected," and are likely to have a bigger effect in raising inflation and slowing growth.
Still, Powell said, "We are well positioned to wait for greater clarity before considering any adjustments to our policy stance."
11:19 a.m. ET
Trump: 'Perfect Time' For Powell To Cut Rates
President Trump, posting on Truth Social, wrote, "This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always "late," but he could now change his image, and quickly." He concluded, "CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS."
11:12 a.m. ET
Stocks Sell Off Ahead Of Powell, But Off Lows
The S&P 500 fell 3.25% in late morning trade. The 10-year Treasury yield tumbled to 3.96%. Those are both off morning lows, but still down significantly for the day, adding to a massive weekly sell-off.
Stocks were rebounding in part because President Trump, on Truth Social, said Vietnam's leader told him that he would cut tariffs to zero if he can make a deal with the U.S.
Markets now see a 48% chance of a Fed rate cut on May 7. There's a 100% chance of a cut by the June 18 meeting, with odds slightly favoring 50 basis points by that meeting.
Investors are clearly hoping for dovish signals from Powell.
8:47 a.m. ET
More Jobs Report Details
Hiring strength was focused on the health care sector, which added 54,000 jobs; leisure and hospitality (43,000); social assistance (24,000); retail (24,000); and transportation and warehousing (23,000).
8:42 a.m. ET
Some Federal Jobs Cut
Federal government employment fell by 4,000 on a seasonally adjusted basis, including a loss of 3,200 jobs outside the Postal Service.
8:40 a.m. ET
S&P 500 Futures Still Down Sharply
S&P 500 futures fell 2.8%, not that different from before the jobs report. The 10-year Treasury yield dived to 3.89%, also about where it was before the 8:30 a.m. ET release.
Markets are tumbling as China retaliated vs. Trump tariffs, raising recession fears.
On Thursday, the major indexes suffered their worst one-day percentage losses since 2020.
U.S. Vs. World: What's At Stake As Trump Trade War Intensifies
8:37 a.m. ET
Job Growth Tops Views
The jobs report showed a stronger-than-expected 228,000 boost to employer payrolls, including 209,000 in the private sector. That easily topped forecasts of 131,000 and 115,000, respectively. However, job gains for the prior two months were revised down a combined 48,000.
The jobless rate edged up to 4.2%, as expected.
Some of the details weren't as strong. Average hourly earnings rose 0.3% vs. February but the annual gain cooled to 3.8%.
Jobs Report Expectations
Economists expect the March jobs report to show employers added 131,000 payroll jobs, with 115,000 in the private sector. The unemployment rate is forecast to tick up to 4.2%, as average hourly earnings rise 0.3% on the month and a steady 4% from a year ago.
How Has Powell's View Changed In 3 Weeks?
At the Fed's March 19 meeting, the policy statement characterized economic growth and the labor market as being in "solid" shape.
"We do not need to be in a hurry to adjust our policy stance, and we are well positioned to wait for greater clarity" on President Trump's agenda, Powell said.
He said the "net effect" of Trump's trade, immigration, regulatory and fiscal policies is what matters for Fed policy.
However, the Fed may not have the luxury of waiting to see how big the next round of Trump tax cuts are, since they may take Congress until the fall to pass.
Still, Powell has said that the Fed can ease policy "if the labor market were to weaken unexpectedly." Further, he has said he expects the inflationary effect of Trump tariffs to be "transitory," which may allow the Fed to focus on its full-employment mandate instead of its price-stability mandate.
Fed Rate Cut Odds
Ahead of the March jobs report, markets are pricing in 38% odds of a quarter-point rate cut at the May 7 Fed meeting, according to CME Group's FedWatch tool.
Markets see 100% odds of a rate cut by the June 18 meeting, with 44% odds the Fed will cut its key rate a half-percentage-point by that meeting.
S&P 500
S&P 500 futures are pointing down 2.7% in early Friday stock market action, ahead of the jobs report. The S&P 500, which suffered its biggest one-day percentage decline since June 11, 2020, on Thursday, finished 12.2% below its Feb. 19 all-time closing high.
The 10-year Treasury yield has plunged well below 4% on recession fears and Fed rate-cut hopes.
