Stocks wobble after Powell warns that rate cuts will likely come later than expected

US stocks wavered Tuesday after Federal Reserve Chair Jerome Powell said a “lack of further progress” on inflation means the central bank likely won’t cut interest rates at its upcoming policy meeting just two weeks away, keeping them higher for longer.

US stocks wavered Tuesday after Federal Reserve Chair Jerome Powell said a “lack of further progress” on inflation means the central bank likely won’t cut interest rates at its upcoming policy meeting just two weeks away, keeping them higher for longer. Stocks seesawed after Powell’s comments, closing mixed Tuesday. The Dow rose 64 points, or 0.2%. The S&P 500 fell 0.2% and the Nasdaq Composite lost 0.1%. Meanwhile, the 2-year Treasury yield topped 5% on Tuesday before retreating below that threshold to about 4.96%. “The recent data have clearly not given us greater confidence” that inflation is headed toward the central bank’s 2% goal, Powell said during a moderated discussion hosted by the Wilson Center. Instead, he said, there are indications “that it is likely to take longer than expected to achieve that confidence.” “Right now, given the strength of the labor market and progress on inflation so far, it’s appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us,” the Fed chief said. Interest rates are currently nestled at a 23-year high after the Fed launched an aggressive rate-hiking campaign two years ago. Inflation is down considerably from a four-decade peak reached in the summer of 2022, but recent inflation reports have shown persistent price pressures in services and housing.