April 5 (UPI) — U.S. markets fell near the end of trading Tuesday as Federal Reserve Governor Lael Brainard said the central bank should move more aggressively to tighten its monetary policy.
The Dow Jones Industrial Average fell 280.70 points, or 0.8%, while the S&P 500 dropped 1.26% and the Nasdaq Composite closed the day down 2.26%.
Stocks began the day slightly positive after posting gains to start the week but hit session lows in the final hour of trading after Bainard said the Fed must “rapidly” shrink its balance sheet to battle rising inflation.
“Currently, inflation is much too high and is subject to upside risks,” Brainard said. “The Committee is prepared to take stronger action if indicators of inflation and inflation expectations indicate that such action is warranted.”
The 10-year treasury yield climbed to 2.56% its highest level since May 2019 after Brainard’s comments.
Deutsche Bank on Tuesday forecast a recession in 2023 if the Federal Reserve acts too aggressively.
“We no longer see the Fed achieving a soft landing,” Deutsche Bank economists wrote in a note. “Instead, we anticipate that a more aggressive tightening of monetary policy will push the economy into a recession.”
Tech stocks fell Tuesday with Nvidia dropping 5.22%, Tesla falling 4.73% and Amazon declining 2.55%.
Twitter stock, however, gained 2.02%, rising for the second straight day after as it was announced Tesla and SpaceX CEO Elon Musk would join the social media company’s board of directors after becoming the social media platform’s largest individual shareholder.
Oil prices gave up early gains with West Texas Intermediate crude falling 0.5% to $102.76 per barrel.
