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Stocks - Wall Street Shrugs After Powell's Speech

Investing.com - U.S. stocks traded lower Friday after Federal Reserve Chairman Jerome Powell reiterated that the central bank will act “as appropriate” to sustain the economy, in a speech that also blamed trade policy for much of the global economic slowdown.

The Dow Jones Industrial Average was down 33 points, or 0.1%, by 10:30 AM ET (14:30 GMT), while the S&P 500 was off 6 points, or 0.2%, and the Nasdaq 100 was down 25 points ,or 0.3%.

Stocks had already opened lower, reeling from China’s announcement of import tariffs on some $75 billion of U.S. imports, including new levies on crude oil and autos.

After a brief bounce, as Powell’s headlines hit the wires, they resumed their declines as the speech failed to flesh out any promises for monetary stimulus beyond what Powell had already said in recent public appearances.

If anything, the speech represented some pushback against pressure from President Donald Trump, who has repeatedly insulted Powell and the Fed over Twitter and called for a 100-basis-point cut in its interest rates.

At three separate points in his speech, Powell referred to the problems for the central bank by trade policy, in what appeared to be an implicit critique of Trump’s approach to the U.S.-China relationship.

“While monetary policy is a powerful tool that works to support consumer spending, business investment, and public confidence, it cannot provide a settled rulebook for international trade,” Powell said, adding that there are “no recent precedents to guide any policy response to the current situation.”

Powell also noted that the U.S. economy is still looking strong, despite increased risks to the global outlook.

“Job creation has slowed from last year's pace but is still above overall labor force growth. Inflation seems to be moving up closer to 2 percent,” he said. “Based on our assessment of the implications of these developments, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.”

Among the most active stocks Friday, Foot Locker (NYSE:FL) fell 12% after its quarterly update failed to match the strength of other retail reports this week. Salesforce.com (NYSE:CRM) rose 5.7% after its quarterly results showed new acquisitions contributing to a healthy 22% rise in revenues, while Boeing (NYSE:BA) rose 3.1% on the back of reports that the Federal Aviation Agency is getting closer to letting the troubled 737 Max fly again.

Trade-sensitive semiconductor stocks were broadly lower, as was Apple (NASDAQ:AAPL), which lost 0.9%.

Crude oil futures, however, recovered some of the losses they made on the back of the Chinese news to trade at $54.22 a barrel, a loss of 2.0% on the day. Haven assets made broad but unspectacular gains: gold futures gained nearly 1% to $1,523.15 a troy ounce. The dollar index, which tracks the greenback against a basket of currencies, gave up 0.1% on the back of the speech, mainly due to losses against the yen and Swiss franc.

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