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Wall Street’s main indexes fell on Wednesday as Federal Reserve Chair Jerome Powell remained firm in bringing inflation back to 2% target, spurring worries of more monetary tightening.

“Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go,” Powell said in his prepared remarks ahead of his testimony before the House Financial Services Committee at 10 a.m. ET.

Money markets still expect only one rate hike of 25 basis points in July by the U.S. central bank for the rest of the year, according to CMEGroup’s Fedwatch tool.

Megacap companies struggled to gain as yields on the 2-year treasury notes, which move in line with interest rate expectations, rose marginally after Powell’s comments.

All S&P 500 sub-sectors fell, with the rate-sensitive real estate sector leading the declines, with a 0.8% drop.

“We probably won’t see 2% inflation for four years unless the Fed gets overly aggressive and pulls a Volcker, and that’s not in the cards,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

US Federal Reserve chair says additional rate hikes likely

In the previous session, Wall Street’s main indexes fell as investors booked profits in the wake of a sustained market rally amid signs of weakening global demand. Still, the benchmark S&P 500 has advanced around 14% so far this year.

If a U.S. recession becomes more likely, Goldman Sachs said investors should maintain upside exposure to equities by using options to hedge a potential 23% fall in the S&P 500 index.

It holds chances of a recession at 25%, and in that base case, it expects the S&P 500 to rise to 4,500 - about 2.5% higher than current levels.

Among individual movers, FedEx slid 0.3% after the shipping firm reported a decline in quarterly earnings and said global shipping downturn has hurt margins for the sector. Fellow postal operator United Parcel Service slipped 1.2%.

At 9:46 a.m. ET, the Dow Jones Industrial Average was down 104.69 points, or 0.31%, at 33,949.18, the S&P 500 was down 16.92 points, or 0.39%, at 4,371.79, and the Nasdaq Composite was down 78.78 points, or 0.58%, at 13,588.52.

Crypto firms, including Coinbase, Riot Platforms, Marathon Digital and Bit Digital, rose between 2.6% and 9%, tracking an uptick in Bitcon prices, which hit highest level in six weeks.

U.S.-listed shares of Chinese electric vehicle (EV) makers Li Auto, Nio Inc and Xpeng Inc added between 1.5% and 5.6% as China unveiled 520 billion yuan ($72.3 billion) worth of tax breaks to boost sales of EVs and other green cars over the next four years.

Adobe added 1% after brokerage BMO Capital Markets turned bullish on the stock, citing generative Artificial Intelligence strength.

Declining issues outnumbered advancers for a 2.80-to-1 ratio on the NYSE and a 2.33-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and no new lows, while the Nasdaq recorded 33 new highs and 45 new lows.

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