Wall Street Slips After New Fed Chair's Testimony

Wall Street stocks stumbled on Tuesday, reversing strong gains made in the last two sessions, after congressional testimony from new Federal Reserve chief Jerome Powell revived worries about higher interest rates.

The Dow Jones fell 1.2 percent to finish at 25,410.

The S&P 500 dropped 1.3 percent to 2,744, while the Nasdaq lost 1.2 percent to 7,330.

Powell said the US economic outlook has strengthened since December, a bullish appraisal that markets took as a sign the Fed could accelerate its pace of monetary tightening, with four interest rate hikes in 2018 rather than the three that were expected.

"We still have that same haze of concerns about rising interest rates and inflation," said Art Hogan, chief market strategist at Wunderlich Securities. "Those boogeymen are still with us today."

US stocks have been volatile in recent weeks, falling sharply in early February on inflation worries, but regaining some ground more recently. The major indices rose more than one percent on Monday.

Among individual shares, Comcast plunged 7.4 percent after announcing it was offering £22 billion (US$31 billion) for Sky, outbidding Rupert Murdoch's 21st Century Fox, whose takeover ambitions have hit British government resistance. Fox shares lost 3.0 percent.

Disney, which had been in line to become the ultimate owner of the Sky assets through a deal with Fox, shed 4.5 percent amid the prospects of a bidding war.

Macy's department store chain rose 3.5 percent after reporting that fourth-quarter profits nearly tripled following a strong holiday shopping season that contributed to a 1.3 percent rise in comparable store sales.

However, other leading retailers finished the session mostly lower, with Best Buy, Target and Gap all losing at least one percent.

The drop came despite a report that US consumer confidence surged to a 17-year record in February.

Hogan said many retailers have enjoyed a strong run in recent months and were due for a pullback. (AFP)