Freshly sworn in Federal Reserve Chairman Jerome Powell took to Capitol Hill Tuesday, Feb. 27, for his first of two days of testimony to Congress. As Powell detailed the Fed's plans for monetary policy in the coming months, Wall Street took notice.

Stock futures had traded lower in premarket action when Powell's prepared remarks were released ahead of his appearance. Stocks moved into positive territory as Powell began speaking and answering lawmakers' questions but soon dipped into the red.

In answering a question from Rep. Carolyn Maloney (D-NY), Powell may have hinted at more rate hikes than initially anticipated. The Fed had previously projected three rate hikes this year followed by two in 2019.

"At the December meeting, the median [FOMC] participant called for three rate increases in 2018. Now since then -- and we will submit another projection, all of us, in three weeks -- but what we've seen is incoming data that suggests a strengthening in the economy," Powell said around 10:42 a.m. EST.

TheStreet's Executive Editor Brian Sozzi explains why stocks have dived on Powell's comments.

Powell has the market spooked, we talked to the CEO of $GOOS and some how, some way, $M is blowing minds CC: @thesthttps://t.co/yTI7eSvnlR

— Brian Sozzi (@BrianSozzi) February 27, 2018

"We've seen continuing strength in the labor market, we've seen some data that will -- in my case -- add some confidence to my view that inflation is moving up to target," Powell added. "We've also seen continued [economic] strength around the globe, and we've seen fiscal policy become more stimulative. I think each of us is going to be taking the developments since the December meeting into account and writing down our new rate paths as we go into the March meeting and I wouldn't want to pre-judge that," he continued.

If the Fed finds that the economy is strong, inflation is growing to its 2% mandate and employment statistics remain positive, it could increase the pace at which it raises the federal funds rate.

Following that comment, stocks moved broadly lower. The Dow shed as much as 0.28% for the day within a few minutes of that comment, falling at about 10:55 a.m. EST. Stocks closed at the lows of the session. 

Around the same time the Dow dipped, bond yields increased with the 10-year Treasury note yielding as high as 2.89%.

Powell did address recent volatility in the stock market, though without much detail.

"Despite the market's gyrations, financial conditions are still 'accommodative' in Powell's assessment. Presumably, this reflects the consensus view of the entire FOMC," wrote HSBC analysts in a note outlining the implications of Powell's testimony Tuesday.

"Most indexes of financial conditions still signal easy financial conditions, with stock markets at elevated levels and credit spreads still relatively tight. Powell has clearly signaled that market volatility of the sort recently experienced will not be a deterrent to policy tightening this year," HSBC added.

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