Markets headed lower after the open Wednesday after Federal Reserve Chair Jerome Powell said the economic recovery could be slower than originally thought.
Around the noon hour, the Dow was down around as much as 500 points. Losing some of the strength provided by major tech stocks, markets continued to battle with the potential longevity of the coronavirus pandemic.
"The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II. We are seeing a severe decline in economic activity and in employment, and already the job gains of the past decade have been erased," Powell said, speaking as part of a webinar for the Peterson Institute for International Economics.
As of the April jobs report the unemployment rate in the U.S. sat at 14.7%, with job losses expected to continue.
Speaking on potential next steps for the Fed, Powell said negative interest rates are not being considered despite continued emphasis, and tweets, from President Donald Trump.
On negative rates, Powell said, “"it's not something that we’re considering. We think we have a good toolkit."
Powell said the Fed’s economic response has been “timely and appropriately large” but “may not be the final chapter” as the coronavirus has created an unprecedented economic situation which relies on several yet unanswered questions including the timing of potential vaccines and treatments
“Since the answers are currently unknowable, policies will need to be ready to address a range of possible outcomes,’ Powell said.
Powell said that 40% of households making less than $40,000 a year lost a job in March. TheStreet founder and ActionAlertsPlus portfolio manager Jim Cramer said we shouldn't expect to get those jobs. "We gotta open. We cannot have a Great Depression," Cramer said.
We're all scared of Covid, but we have to open the economy...social distancing is good. Let's make sure people do it," Cramer concluded.