The healthcare index .SPXHC , which is the worst performing S&P sector this year, was off 0.26%.
In the first day of testimony before the Congress, Powell said the USA economy is still under threat from disappointing factory activity, tame inflation and a simmering trade war.
"To cut to the chase: the higher-than-expected print will not prevent the Fed from cutting rates in July", said Eric Winograd, a senior economist at AllianceBernstein.
A Labor Department report showed USA underlying consumer prices rose by the most in almost 1-1/2 years in June, but that was unlikely to change expectations the Fed would cut rates this month. "However, inflation has been running below the FOMC symmetric two-percent objective, and crosscurrents, such as trade tensions and concerns about global growth, have been weighing on economic activity and the outlook". That accusation followed his contention Friday that the central bank "doesn't have a clue" and is "our most hard problem".
Fed Chair Jerome Powell said in prepared congressional testimony that a slowing global economy and trade tensions had strengthened the case for looser monetary policy.
Trump handpicked Powell more than a year ago, but has not shied away from criticizing the central bank head.
"Apparent progress on trade turned to greater uncertainty, and our contacts in business and agriculture report heightened concerns over trade developments", he said.
In his semi-annual testimony before Congress, Powell said that trade policy and a weak global economy "continue to weigh on the US economic outlook".
California Democratic Rep. Maxine Waters pressed Powell at a House Financial Services Committee hearing about whether he would comply if he were to get a phone call from Trump asking him to pack up his stuff and go. Traders will be eyeing European Central Bank minutes and Powell's testimony before the Senate Banking Committee on Thursday for further clues. "But Wednesday's message was clear, the data is softening - particularly on the inflation side - and downside risks are significant", Erlam said. Referring to rates, Powell repeated a pledge the Fed made in its June policy statement that officials would "act as appropriate to sustain the expansion". Oxford Economics analyst Kathy Bostjanic said she expects a quarter-point cut at the July meeting, and another in September. "We see business investment having weakened after having been quite strong in '17 and most of '18".
Powell has been heavily criticised by President Donald Trump, but last night insisted he will not be forced out of the job.
Though US economic growth remains largely on track, and the jobs report for June showed continued strong hiring, the events of May changed US trade policy from something of a sideshow in the Fed's view to a central concern.
That step eased fears that Trump would extend punitive tariffs to an additional $300 billion in Chinese goods, in the process inviting retaliation from Beijing on American exports and likely weakening both nations' economies.
He also noted that slower growth by some large foreign economies "could affect the USA economy".