US stocks tumble as Fed chief warns downturn may be long

NEW YORK: Wall Street stocks slumped for a second straight session on Wednesday after the Federal Reserve chief highlighted the risks facing the US economy after coronavirus shutdowns.The broad-based S&P 500 fell 50.12 points to 2,820.00, while the tech-rich Nasdaq Composite Index dropped 139.38 points to 8,863.17.

Fed Chair Jerome Powell warned the economic outlook was"highly uncertain" and said Washington may need to spend beyond the nearly US$3 trillion already approved by Congress. "Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery," Powell said.

Analysts blamed the remarks for sucking momentum out of US markets, which have rallied with few pullbacks since early April on anticipation of a speedy economic recovery."The market is taking a cue that maybe there was a bit of overexcitement about how quickly the economy can get back on track," said JJ Kinahan, chief market strategist at TD Ameritrade.

Other areas of weakness included oil companies, with Exxon Mobil shedding five per cent, as well as the aviation sector, where American Airlines plunged 5.6 per cent.

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