Stocks fell Wednesday, with declines in the three major indices accelerating into the last hour of trading, as traders digested commentary from Federal Reserve Chair Jerome Powell.

[Click here to read what’s moving markets heading into Thursday, May 14]

In his comments, Powell undercut hopes of a quick V-shaped recovery for the U.S. economy amid the coronavirus pandemic, saying that a deep, long downturn could “leave behind lasting damage” to economic productivity.

“The recovery may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems,” Powell said during his webcast appearance with the Peterson Institute for International Economics, according to prepared remarks.

Powell also reiterated that the central bank would use all of its monetary policy tools “until the crisis has passed and the economic recovery is well under way,” and suggested that Congress boost fiscal stimulus to mitigate the risk of longer-term economic damage.

The remarks reiterated sentiments previously expressed by other Fed officials, many of whom acknowledged that the extended shutdowns that have helped bring down new case growth for the virus have simultaneously come at the expense of economic and business activity. A number of Federal Reserve officials who delivered public remarks on issued more cautious commentary around the coronavirus’s near- and long-term impacts on the U.S. economy and financial markets.

Cleveland Fed President Loretta Mester, a voter in this year’s Federal Open Market Committee (FOMC), said Tuesday she expected unemployment to hit or top 20% domestically, and for second-quarter annualized GDP growth to be negative by as much as 40%, before a gradual economic recovery kicks off in the second half of the year.

And during a webcast Tuesday, St. Louis Fed President James Bullard said widespread shelter in place orders could not go on indefinitely, saying, “You’ll get too many business failures and you’ll really do lasting damage.”

Earlier, on Tuesday, the three major U.S. equity indices ended with their largest one-day declines in seven sessions, as market participants grew wary of some states’ reopening processes, and considered other major metropolitan areas’ extended stay in place orders. Los Angeles County will likely remain under distancing orders through July, officials said Tuesday. And New York City residents are likely to remain under stay in place orders through at least June, Mayor Bill De Blasio said earlier this week.

But other states and counties are already in the midst of – or will soon begin – a phased reopening process. During a congressional testimony Tuesday, Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, warned of consequences that “could be serious” if parts of the country open before the pandemic is adequately contained.

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4:04 p.m. ET: Stocks drop, Nasdaq turns negative for the year after Powell’s warning

Here were the main moves in markets as of 4:04 p.m. ET:

• S&P 500 (^GSPC): -50.12 (-1.75%) to 2,820.00

• Dow (^DJI): -516.81 (-2.17%) to 23,247.97

• Nasdaq (^IXIC): -139.38 (-1.55%) to 8,863.17

• Crude (CL=F): -$0.27 (-1.05%) to $25.51 a barrel

• Gold (GC=F): +$15.40 (+0.90%) to $1,722.20 per ounce

• 10-year Treasury (^TNX): -2.9 bps to yield 0.6490%

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3:10 p.m. ET: Sell-off accelerates, three major indices off at least 2%

Here were the main moves in equity markets, as of 3:11 p.m. ET:

• S&P 500 (^GSPC): -64.23 points (-2.13%) to 2,809.1

• Dow (^DJI): -556.33 points (-2.34%) to 23,208.45

• Nasdaq (^IXIC): -192.27 points (-2.14%) to 8,809.02

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2:37 p.m. ET: US WTI crude oil futures settle lower

A sell-off in risk assets extended into the energy markets Wednesday.

June futures for U.S. West Texas intermediate crude oil settled lower by 1.9% to $25.29 per barrel, giving back some of Tuesday’s more than 6% advance.

July futures for Brent crude, the international standard, also settled lower by more than 2% to $29.19 per barrel on Wednesday.

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11:26 a.m. ET: Stocks hold lower as session rolls on

The S&P 500 and Dow were each off at least 1% during intraday trading Wednesday, following cautionary remarks from Federal Reserve Chair Jerome Powell earlier in the session.

Losses in the S&P 500 were led by a drop in the Energy sector, down 4.5%, and Financials sector, off 2.8%. Declines in shares of Raytheon Technologies and Dow Inc. led to the downside in the 30-stock Dow.

The Nasdaq outperformed relative to the other major indices, falling just 0.7% intraday as shares of big tech components including Amazon, Apple and Netflix rose.

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9:34 a.m. ET: Stocks reverse pre-market gains to open lower after Powell remarks

Here were the main moves in markets, as of 9:34 a.m. ET:

• S&P 500 (^GSPC): -20.28 points (-0.71%) to 2,849.84

• Dow (^DJI): -206.5 points (-0.87%) to 23,558.28

• Nasdaq (^IXIC): -51.31 points (-0.57%) to 8,950.45

• Crude (CL=F): +$0.13 (+0.5%) to $25.91 a barrel

• Gold (GC=F): +$6.30 (+0.37%) to $1,713.10 per ounce

• 10-year Treasury (^TNX): -2.7 bps to yield 0.665%

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9:23 a.m. ET: Powell negative rates are ‘not something that we’re considering’

Federal Reserve Chairman Jerome Powell said negative interest rates are not currently under consideration as a potential tool for the central bank to unleash to help support the virus-stricken economy, with the benchmark interest rate currently near 0%.

“I know that there are fans of the policy [of negative rates], but for now it’s not something that we’re considering,” Powell said during his virtual appearance with the Peterson Institute for International Economics. “We think we have a good toolkit and that’s what we’ll be using.”

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9:15 a.m. ET: Powell says unemployment will likely peak over the next month or so but ‘it’ll take some time to get back to where we were’

Federal Reserve Chairman Jerome Powell said he anticipated that unemployment would likely peak in the next month or so, after hitting an all-time high of 14.7% in April, according to Bureau of Labor Statistics data spanning back to 1948.

“I would say that probably over the course of the next month or so, unemployment will peak,” Powell said during his virtual appearance with the Peterson Institute for International Economics.

“And then as we return to more normal levels of economic activity, it’s a reasonable expectation that unemployment will start to decline again,” he added. “And it may decline sharply, but it’s also likely to remain well above the levels that we saw earlier this year and all through 2019 and 2018, which were 50-year lows in unemployment, so it’ll take some time to get back to where we were.”

“The economy should substantially recovery once the virus is under control,” he said.

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9:00 a.m. ET: Powell says US economy faces 'longer-term concerns' due to coronavirus

Federal Reserve Chairman Jerome Powell undercut hopes of a quick V-shaped recovery for the U.S. economy amid the coronavirus pandemic, saying that the depth and length of the downturn could “leave behind lasting damage” to economic productivity.

“The recovery may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems,” Powell said during his webcast appearance with the Peterson Institute for International Economics, according to prepared remarks.

Powell also doubled down on the central bank’s assertion that it was prepared to use further policy tools as needed to blunt some of the virus-related damage.

“While the economic response has been both timely and appropriately large, it may not be the final chapter,” Powell said.

Powell added that additional fiscal policy measures from Congress could help better position the economy for a recovery, acknowledging “additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery.”

READ MORE

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8:30 a.m. ET: Producer prices fall 1.2% year on year in April for the biggest drop since 2015

The Labor Department’s producer price index (PPI) declined in April over last year by 1.2%, representing the largest drop in five years. This followed a 0.7% increase in producer prices in March, and was steeper than the 0.4% decline expected, according to Bloomberg data.

Over last month, the PPI fell 1.3%, also much steeper than the 0.5% drop expected.

Excluding more volatile food and energy prices, the PPI fell 0.3% over last month in April, following a 0.2% rise in March.

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7:13 a.m. ET Wednesday: Stock futures rise

Here were the main moves in markets, as of 7:13 a.m. ET Wednesday:

• S&P 500 futures (ES=F): up 17.5 points, or 0.61%, to 2,870.00

• Dow futures (YM=F): up 159.00 points, or 0.67%, to 23,733.00

• Nasdaq futures (NQ=F): up 70 points, or 0.77%, to 9,148.25

• Crude (CL=F): +$0.06 (+0.23%) to $25.84 a barrel

• Gold (GC=F): +$2.20 (+0.13%) to $1,709.00 per ounce

• 10-year Treasury (^TNX): -2.8 bps to yield 0.664%

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7:01 a.m. ET Wednesday: Mortgages for home purchases picked up again last week, signaling recovery in housing market

The Mortgage Bankers Association’s weekly purchases mortgage applications index rose 11%, seasonally adjusted, from the prior week for the period ending May 8. This extended a 3.9% gain from the prior week.

“There continues to be a stark recovery in purchase applications, as most large states saw increases in activity last week. In the ten largest states in MBA’s survey, New York – after a 9% gain two weeks ago – led the increases with a 14% jump. Illinois, Florida, Georgia, California and North Carolina also had double-digit increases last week,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement.

“We expect this positive purchase trend to continue – at varying rates across the country – as states gradually loosen social distancing measures, and some of the pent-up demand for housing returns in what is typically the final weeks of the spring home buying season,” Kan added.

An index tracking refinances fell 3% from the previous week, but was still 201% higher than the same week a year ago. The Market Composite Index, which comprises volume for both refinances and purchases applications, rose 0.3% for the week ended May 8, after a 0.1% rise the prior week.

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6:07 p.m. ET Tuesday: Stock futures fall

Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:07 p.m. ET:

• S&P 500 futures (ES=F): down 8.5 points, or 0.3%, to 2,844.00

• Dow futures (YM=F): down 44 points, or 0.19%, to 23,530.00

• Nasdaq futures (NQ=F): down 19.75 points, or 0.22%, to 9,058.5

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