U.S. 10-year treasury bond (UST) yields have fallen for the third consecutive day to 2.864 per cent. His address to congress signalled the Fed will keep raising interest rates to contain inflation.
The trade worries are piling onto a market that was already nervous.
US stocks had been higher earlier in the day after Federal Reserve chairman Jerome Powell testified before Congress that he does not see inflation in workers' wages "at a point of acceleration", easing trading anxieties following his comments earlier in the week many interpreted as a signal the Fed may raise rates more quickly than expected to beat down inflation.
The Standard & Poor's 500 index was up 3 points, or 0.1 percent, to 2,717.
The late-day weakness underscored lingering skittishness amongst investors.
The Dow Jones Industrial Average declined 381 points, or 1.5%, to 25,029, the S&P 500 lost 30 points, or 1.11%, to 2,714 and the Nasdaq Composite dropped 57 points, or 0.78%, to 7,273. The S&P 500 added 0.3%, and the Nasdaq Composite advanced 0.6%.
The new chair signalled the central bank could hike rates more than three times this year should economic and inflation data continue to prove healthy. Some investors took that as a signal that the Fed may get more aggressive on rate increases, which sent stocks down and Treasury yields higher.
On Tuesday, Powell gave an upbeat view on the US economy and said data had strengthened his confidence on inflation.
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Caterpillar (CAT) and Boeing (BA) racked up the heaviest early declines on the Dow, off more than 1% each.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.85 percent.
The biggest loss in the S&P 500 came from Foot Locker, which plunged after it said sales trends were weaker last quarter than analysts expected.
France's CAC 40 fell 1.1 percent and Germany's DAX was down 2 percent.
Energy (-2.3%) was the weakest of the S&P 11 industry groups, moving lower alongside the price of crude oil after the weekly USA crude oil inventory report showed inventories rising by 3M barrels last week; April WTI futures dropped 2.2% to $61.64/bbl.
Crude oil was down 2.5% at $61.46. The Nasdaq fell 12 points, or 0.2 percent, to 7,260. Brent crude, the worldwide standard, lost 62 cents to $64.11 per barrel.
Shares in L Brands Inc.(LB) tumbled 10% after the Victoria's Secret parent late Wednesday gave a quarterly outlook that appeared to disappoint Wall Street (http://www.marketwatch.com/story/victoria-secrets-l-brands-stock-tanks-on-expectations-of-lower-q1-profit-2018-02-28). The euro rose to $1.2331 from $1.2255, and the British pound rose to $1.3790 from $1.3768.