Fed's Powell sees 'no evidence' the USA economy is overheating



Investors also digested Senate testimony by Fed Chairman Jerome Powell, who called for gradual interest rate hikes and said he doesn't see evidence of the economy overheating.

"Hawkish comments from Powell have fuelled market speculation of the Federal Reserve raising US interest rates four times this year - ultimately supporting the dollar", said Lukman Otunuga, Research Analyst at FXTM.

The Dow Jones industrial average fell 43, or 0.2 percent, to 24,985, and the Nasdaq composite lost 22, or 0.3 percent, to 7,250.

USA stocks dove in another dizzying day of trading after President Donald Trump promised on Thursday to deliver stiff tariffs on imported steel and aluminum, which raised the threat of escalating retaliation by other countries and higher inflation.

Powell brushed aside concerns in some financial circles that the continued rise in the share market is creating a bubble that could lead to a crisis, saying that while the Fed had to be alert to the build-up of financial imbalances, the risk did not appear to be high.

That was its longest winning streak in monthly terms since 1959 and analysts and traders cautioned that much of the turbulence this week may stem from market positioning as much as a substantial change of tack by Powell.

The new Fed boss on Tuesday highlighted ways that he personally thinks the USA economic outlook has strengthened.

Even as Powell's remarks began to soothe nerves, markets got rattled again by fresh comments that New York Fed President William Dudley reportedly made Thursday in Brazil.

Bond prices rose as demand jumped for safer investments, which pushed yields lower.

Data showing the currency bloc's manufacturing boom slowed a little further last month added to the downbeat mood, helping send the euro to as low as $1.2162, its weakest since January 12.

What else could help drive markets? The moderate wage growth is one of the signs for the labor market slackness.

But the Bank of Japan and European Central Bank could act as counterweights - euro zone inflation for February at 1.2 per cent showed on Wednesday that the ECB's near-2-per cent target remains years away. That data is due at 8:30 a.m. ET.

Equity futures signaled Wall Street would open flat after declines of more than 1 per cent on Tuesday when the U.S. Federal Reserve chief delivered his debut testimony to Congress. A reading of at least 50 indicates improving conditions.

Rather, "the robust job market should continue to support growth in household incomes and consumer spending, solid economic growth among our trading partners should lead to further gains in US exports, and upbeat business sentiment and strong sales growth will likely continue to boost business investment", he said.

Gold prices steadied on Wednesday after the previous session's more than 1 per cent fall following comments by the Federal Reserve's new chairman that fueled views the USA central bank would raise rates four times this year rather than three.

Which stocks look like key movers?

Reports out Thursday showed recent tax cuts buoyed Americans' spending power in January, unemployment claims fell last week to an nearly five-decade low, and factories expanded in February at the fastest rate since 2004.

Best Buy Co.(BBY) earnings and revenue came in above expectations, sending shares 2% higher.

The S&P 500 was down 1.1 percent as of 1:11 p.m.in NY.

What are other assets doing?

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