Dow drops 574 points as Fed chief Powell opens the door to steeper rate hikes

• US stocks tumbled on Tuesday after Fed chief Jerome Powell opened the door to bigger rate hikes.
• Markets now see a 50-basis-point increase as likely at this month's Fed meeting.

US stocks tumbled on Tuesday after Federal Reserve Chairman Jerome Powell opened the door to bigger rate hikes.

"The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated," he said in testimony on Capitol Hill. "If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes."

Markets now see a 50-basis-point increase as likely at this month's meeting of the Federal Open Market Committee. That would mark a reacceleration in the pace of tightening, after the last hike of 25 basis points in February.

Meanwhile, a key recession indicator flashed its loudest warning ever. The inversion between the 2-year and 10-year Treasury yields hit a record 103.5 basis points on Tuesday, according to Refinitiv data.

Here's where US indexes stood at the 4 p.m. closing bell on Tuesday:

• S&P 500: 3,986.44, down 1.53%

• Dow Jones Industrial Average: 32,856.86, down 1.72% (574.58 points)

• Nasdaq Composite: 11,530.33, down 1.25%

Here's what else is happening today:

• The army of professionals working with FTX billed $38 million in expenses for January alone, CoinDesk reported.
• Citadel boss Ken Griffin made $4.1 billion last year, the most of any hedge fund manager in history, according to Institutional Investor.
• Bank of America CEO Brian Moynihan said the US will enter a recession in the third quarter of this year.

In commodities, bonds, and crypto:

• West Texas Intermediate crude sank 3.7% to $77.48 per barrel. Brent crude, the international benchmark, fell 3.5% to $83.20.
• Gold dropped 2% to $1,818.10 per ounce.
• The 10-year Treasury yield was nearly flat at about 3.97%.
• Bitcoin dipped 0.8% to $22,198.