Dow drops nearly 700 points as Fed flags tariff risks

US stocks fell on Wednesday after Federal Reserve Chair Jerome Powell warned that tariffs could hamper economic growth and complicate efforts to control inflation, posing new challenges for monetary policymakers.

The Dow Jones Industrial Average fell 1.73%, or 699 points, to close at 39,669 points.

The S&P 500 fell 2.24%, to 5,275 points, while the Nasdaq Composite lost about 3.1%, to 16,307 points.

This coincided with widespread losses in the technology sector due to the US administration's restrictions on chip exports to China and the launch of an investigation into Nvidia's supply of artificial intelligence (AI) chips to the Chinese company DeepSeek.

In Europe, the STOXX Europe 600 index fell 0.2% to 507.1 points, despite gains in most major stock exchanges.

The UK's FTSE 100 index rose 0.3% to 8,275 points, the German DAX gained 0.25% to 21,311 points, while the French CAC 40 remained unchanged at 7,329 points.

In Japan, the Nikkei 225 index fell 1%, or 347 points, to 33,920 points, while the broader TOPIX index declined 0.6% to 2,498 points.

Oil reached its highest settlement in two weeks at the end of trading, with Brent crude futures for June delivery rising 1.80%, or $1.18, to $65.85 a barrel.

US WTI crude futures for May delivery rose 1.90%, or $1.14, to $62.47 a barrel.

Gold futures for June delivery grew 3.3% to settle at $3,324.50 an ounce, amid continued weakness in the US currency and trade tensions stemming from Trump's protectionist policies.