Stocks tumble over 2 percent

U.S. stocks ended the week with a deep sell-off, leaving them lower for the five days as the White House’s latest trade bluster rattled global financial markets.

The S&P 500 index plunged more than 2 percent and all 30 members of the Dow Jones Industrial Average retreated as President Donald Trump ordered a review of additional tariffs that prompted an aggressive response from China. Fresh attempts by White House officials to tone down the bluster failed to calm nerves, with the Cboe Volatility index back above 21. Treasury Secretary Steven Mnuchin added to the anxiety by saying there’s a “level of risk” the spat could worsen.

Trump said the market turmoil was short-term “pain,” but insisted the outcome would leave the U.S. in a better position.

Fed chair gives inaugural speech

The threat of a trade war loomed over Jerome H. Powell’s inaugural speech as Federal Reserve chairman on Friday in Chicago, even as he tried to focus attention on the fundamental strength of the American economy. Financial markets fell Friday after Powell indicated that the Fed saw no imminent need to adjust its outlook. In his prepared remarks to the Economic Club of Chicago, Powell did not even mention tariffs. But in a question-and-answer session after the speech, they were the first topic raised.

The Fed chief, who took his post in February, said it was “too early to say” what impact the dueling trade measures would have. But he made it clear that the Fed would watch closely for any sign that the trade dispute was knocking the recovery off course.

The trade tensions complicate what was already a tricky task for the Fed. Hundreds of billions of dollars in tax cuts and spending increases risk fueling inflation, as do wage pressures from a robust labor market.