Equities Fall Intraday as Powell Flags 'Challenging Situation' for Fed

02:02 PM EDT, 09/23/2025 (MT Newswires) -- US benchmark equity indexes were lower intraday as Federal Reserve Chair Jerome Powell said the central bank is facing a "challenging situation" with respect to its dual mandate.

The Nasdaq Composite was down 0.6% at 22,654.2 after midday Tuesday, while the S&P 500 fell 0.4% to 6,668.1. The Dow Jones Industrial Average dropped 0.1% to 46,334.8. On Monday, the three indexes closed at new record-high levels.

Among sectors, consumer discretionary and technology saw the biggest drops intraday Tuesday, while energy paced the gainers.

Powell said monetary policymakers face a "challenging situation," with near-term risks to inflation tilted to the upside and those to employment leaning to the downside.

"Two-sided risks mean that there is no risk-free path," the Fed chair said. "If we ease too aggressively, we could leave the inflation job unfinished and need to reverse course later to fully restore 2% inflation. If we maintain restrictive policy too long, the labor market could soften unnecessarily."

Separately, Fed Vice Chair for Supervision Michelle Bowman said recent data indicate that policymakers are at a "serious risk of already being behind the curve" in addressing a weakening labor market.

"Should these conditions continue, I am concerned that we will need to adjust policy at a faster pace and to a larger degree going forward," Bowman said.

On Monday, newly appointed Fed Governor Stephen Miran said the central bank's policy rate should be two percentage points lower than where it currently is, while St. Louis Fed President Alberto Musalem cautioned against further rate cuts.

Last week, the Federal Open Market Committee reduced interest rates by 25 basis points to a range of 4% to 4.25%, noting increased downside risks to employment and signaling further policy easing later in 2025.

US Treasury yields were lower intraday Tuesday, with the 10- and two-year rates dropping one basis point each to 4.14% and 3.59%, respectively.

In economic news, the Organization for Economic Co-operation and Development raised its global and US economic growth forecasts for 2025, saying the macro landscape benefited from front-loading ahead of higher tariffs.

US private-sector output growth hit a three-month low in September amid softening demand, though selling prices rose at the slowest pace since April, according to S&P Global's (SPGI) flash purchasing managers' index.

"While growth expectations across both manufacturing and services also continue to be dogged by concerns over the political environment, and especially tariffs, September encouragingly saw business sentiment improve in part due to the anticipated beneficial impact of lower interest rates," S&P Global Market Intelligence Chief Business Economist Chris Williamson said.

West Texas Intermediate crude oil was up 1.8% at $63.41 a barrel intraday.

In company news, AutoZone's (AZO) fiscal fourth-quarter results fell short of market estimates, despite the company recording sequential improvements in its domestic do-it-yourself and commercial sales. The auto part retailer's shares were down 1.2%.

Sempra (SRE) agreed to sell a 45% stake in its energy infrastructure platform to affiliates of investment firm KKR (KKR) and Canada Pension Plan Investment Board in a cash deal worth about $10 billion, as the utility firm aims to simplify its business model and improve earnings growth. Sempra (SRE) shares were up 3.8%, while KKR rose 0.8%.

Micron Technology (MU) is scheduled to report its latest quarterly financial results after the closing bell Tuesday.

Gold was up 0.8% at $3,807.60 per troy ounce, while silver rose 0.6% to $44.48 per ounce.

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