NEW YORK: Wall Street fell sharply again on Friday, pushing the Nasdaq toward a bear market, after China responded heavy-handedly to the Trump administration’s sweeping levies, escalating a global trade war.

Losses in the S&P 500 and Nasdaq steepened after Federal Reserve chair Jerome Powell said President Donald Trump’s new tariffs are “larger than expected” and the economic fallout including higher inflation and slower growth likely will be as well, pointing to the potentially difficult set of decisions ahead for the central bank.

The global selloff in stocks came amid a move into low-risk assets like US government bonds even as safe-haven gold recoiled from Thursday’s record high alongside a further slide in crude oil on fears that a trade war would cause a global recession.

“It is now becoming clear that the tariff increases will be significantly larger than expected,” Powell told an event in Virginia.

“The same is likely to be true of the economic effects, which will include higher inflation and slower growth,” he said, adding that it was “too soon” to consider making changes to US monetary policy.

Powell’s comments suggest the Fed is in no rush to cut its benchmark lending rate from its current elevated level of betw­een 4.25 and 4.50 per cent, as it continues its struggle to bring inflation down to its long-term two- percent target.

Published in Dawn, April 5th, 2025