Federal Reserve Chairman Jerome Powell's upbeat assessment of the strength of the U.S. economy sent stocks tumbling Tuesday, Feb. 27.
The S&P 500 lost 1.27% to 2,744.28, the Nasdaq Composite Index declined 1.23% to 7,330.35 and the Dow Jones Industrial Average fell 1.16% to 25,410.03.
In his first appearance before the House Financial Services Committee, lawmakers asked Powell several times how recent developments such as tax cuts, a new spending deal in Congress and signs that wage growth is strengthening could affect the Federal Open Market Committee's deliberations on monetary policy. He declined to say whether the Fed could be inclined to raise interest rates faster than it has previously signaled, though he said his "personal outlook for the economy has strengthened."
That optimism sent stocks falling on fears that economic growth could increase inflation and lead policymakers to increase interest rates faster or more than signaled. His testimony was in line with the Fed's latest monetary policy report, continuing to highlight a growing economy and the need to continue with gradual interest rate increases. Fed officials have penciled in three rate hikes for 2018, but not all of them agree the Fed should go that quickly. St. Louis Fed President James Bullard recently cautioned against going "too far, too fast" on hikes, adding that the federal funds rate is currently at an appropriate level.
Wells Fargo & Co. lost 1.27% to $59.21, Bank of America Corp. shrank 0.28% to $32.33, Citigroup Inc. declined 1.64% to $76.38 and JPMorgan Chase & Co. decreased 1.19% to $117.36.
Ontario, Calif.-based CVB Financial Corp.'s management touted significant cost savings and revenue opportunities as an offset of the $878.3 million price tag it is paying to acquire Pasadena, Calif.-based Community Bank during its Feb. 27 deal call. CVB expects the deal to be about 12% accretive to 2019 EPS, excluding one-time costs, but also approximately 11% dilutive to tangible book value per share. The dilution is projected to be earned back in 4.9 years. Shares of CVB Financial fell 0.59% to $23.46 while Community Bank jumped 45.12% to $270.00.
Hancock Holding Co. declined 2.79% to $52.30, United Bankshares Inc. fell 2.93% to $36.50 and First Citizens BancShares Inc. dropped 2.64% to $418.29.
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