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US stocks drop as Powell raises economic uncertainties

US stocks drop as Powell raises economic uncertainties

U.S. stocks fell and the dollar rose on Tuesday after the recent comments by the Federal Reserve Chairman Jerome Powell, in addition to the rising trade tensions between US and China.

The Federal Reserve Chairman Jerome Powell during a speech on Tuesday that the Fed was evaluating whether interest rates will be reduced due to economic uncertainties, while Fed member James Pollard added he did not support cutting interest rates by 50 points at the meeting which gave less hopes to the investors.

"Congress chose to isolate the Fed in this way because that damage was felt to occur when monetary policy curbs short-term political interests" Powell added.

At the end of the trading day, the S&P 500 index declined by 0.95 percent reaching 2,917.46 and the Dow Jones Industrial Average slipped 0.67 percent to 26,548.44.  However, the S&P 500 has rallied 6.4 percent in June and hit an all-time high last week. The Dow also is up for more than 7 percent in June. While NASDAQ declined by 1.51 percent.

A sale of new U.S. homes is adding signs of weakness despite lower mortgage rates. Single-family home sales dropped 7.8% in May versus April, the Commerce Department data showed.

Furthermore, the consumers’ confidence fell in June to the lowest level in almost two years as Americans more worried about trade tensions with China and it was harder to find a job. The consumer confidence index slipped to 121.5 from a revised 131.1 in May, the decline in consumer confidence is a hint for a slower U.S. economic growth and more pessimism about the future.

At the moment, most traders are awaiting the outcome of a meeting between President Donald Trump and Chinese leader Xi Jinping that’s expected to take place this weekend on the side-lines of the G20 summit in Osaka, Japan.

As of 20:02 GMT, the US dollar index, which traces the performance of the green currency versus a basket of major currencies, moved up 0.20% to 96.17.

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