Wall Street ends in a hole after Powell's Wyoming speech

(For a Reuters live blog on U.S., UK and European stock markets, click

or type LIVE/ in a news window.)

* Fed will keep tightening until inflation controlled - Powell

* Core PCE increases 0.1% in July vs. 0.6% rise in June

* Dell, Affirm tumble on weaker forecasts

* Indexes down: Dow 3.03%, S&P 3.37%, Nasdaq 3.94%

* Lower for the week: Dow 4.2%, S&P 4%, Nasdaq 4.4%

By David French

Aug 26 (Reuters) - Wall Street ended Friday with all three benchmarks more than 3% lower, as Federal Reserve Chief Jerome Powell's signal that the central bank would keep hiking rates to tame inflation nixed nascent hopes for a more modest path among some investors.

The Nasdaq led declines among the three U.S. benchmarks, registering its worst daily performance since June 16, weighed by high-growth technology stocks which tumbled after rallying the previous day in anticipation of Powell's scheduled speech to the Jackson Hole central banking conference in Wyoming.

The U.S. economy will need tight monetary policy "for some time" before inflation is under control, Powell said at the event. That means slower growth, a weaker job market and "some pain" for households and businesses, he added.

Investors knew further rate rises were coming, and they have been divided between whether a 75-basis-point and a 50-basis-point hike by the Fed was coming next month.

However, recent data highlighting continued strength in the labor market, to offset two consecutive quarters of negative economic growth, had led to some speculating a more tempered pace of hikes could be forthcoming.

"The pushback is coming from the idea that it's not about the pace of hikes going forward and how they tighten financial conditions, it's about the duration of remaining at that restrictive policy stance," said Garrett Melson, portfolio strategist at Natixis Investment Managers.

"That's the nuance they are trying to push forward and Powell was, maybe, a bit more explicit in that today. But if you've listened to other Fed speakers in the last couple of weeks, it's the same message."

With investors repositioning after absorbing the speech, the Cboe Volatility Index .VIX jumped 3.78 points to 25.56, its highest close in six weeks.

All the 11 major S&P 500 sectors were lower, led by declines of between 3.9% and 4.3% in the information technology .SPLRCT , communication services .SPLRCL and consumer discretionary .SPLRCD indexes.

The S&P 500 .SPX lost 141.46 points, or 3.37%, to end at 4,057.66 points, while the Nasdaq Composite .IXIC lost 497.56 points, or 3.94%, to 12,141.71. The Dow Jones Industrial Average .DJI fell 1,008.38 points, or 3.03%, to 32,283.40.

High-growth and technology stocks dropped. Nvidia Corp NVDA.O and Amazon.com Inc AMZN.O fell 9.2% and 4.8%, respectively, having led gainers in the previous session. Meanwhile, Google-parent Alphabet Inc GOOGL.O , Meta Platforms Inc META.O , and Block Inc SQ.N also dipped between 4.1% and 7.7%.

U.S. stock indexes have retreated since the turn of the year as investors priced in the expectation of aggressive interest rate hikes and a slowing economy.

But they have recovered strongly since June, with the S&P 500 recouping nearly half its losses for the year on stronger-than-expected quarterly earnings and hopes decades-high inflation has peaked.

However, Friday's falls wiped out the modest August gains which all three benchmarks had previously carved out, and sent the trio to their second straight week of declines.

For the week, the Nasdaq slid 4.4%, the Dow lost 4.2%, and the S&P 500 fell 4%.

Data earlier showed consumer spending barely rose in July, but inflation eased considerably, which could give the Fed room to trim its aggressive interest rate increases.

Dell Technologies Inc DELL.N fell 13.5% as it joined rivals in predicting a slowdown as inflation and the darkening economic outlook prompt consumers and businesses to tighten their purse strings.

Affirm Holdings Inc AFRM.O tumbled 21.3% after the buy-now-pay-later lender forecast full-year revenue below Wall Street estimates, underscoring the broader downturn in the fortunes of the once high-flying fintech sector.

Volume on U.S. exchanges was 10.37 billion shares, compared with the 10.64 billion average for the full session over the last 20 trading days.

The Fed's game plan: 'Raise and hold' Link

Reporting by Bansari Mayur Kamdar, Devik Jain, Anisha Sircar
and Sruthi Shankar in Bengaluru and David French in New York;
Editing by Maju Samuel, Aditya Soni and Grant McCool

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.