Dow plunges after Powell says not to expect further rate cuts

New York(CNN Business) The Dow fell as much as 450 points Wednesday afternoon before rebounding a bit following comments from Federal Reserve Chairman Jerome Powell which suggested the quarter-point rate cut that the Fed had approved earlier in the day was a one-off.

"We are thinking of it as a mid-cycle adjustment to policy," Powell said during a press conference Wednesday. "I'm contrasting it with the beginning of a lengthy cutting cycle."

The market had initially interpreted the Fed's statement about the rate cut, its first since 2008, to mean more cuts were coming, but dropped after Powell threw cold water on that. The Dow finished the day down about 335 points, or 1.2 percent.

Only four Dow stocks wound up with gains. Apple (AAPL) led the way after solid earnings. JPMorgan Chase (JPM) rose as well though. Bank stocks could benefit if the Fed doesn't raise rates as aggressively since that will boost profits from lending.

The S&P 500 and Nasdaq each tumbled more than 1% too.

"The market is concerned this might be one rate cut and done, as opposed to an extended cycle," Keith Lerner, chief market strategist at SunTrust, told CNN Business. "It's a bit of a knee- jerk reaction. We've had a big run-up. The market is not getting exactly what it wanted."

The Dow regained some of its losses after Powell clarified that he meant the Fed could cut rates again soon, but the cycle of cuts wouldn't last for a long period of time.

"What I said was it's not the beginning of a long series of rate cuts," Powell said. "We'll be taking a somewhat more accommodative stance over time."

That may have soothed some nerves a bit, but it still left experts wondering if the Fed was going to take too long to lower rates more aggressively.

"Powell is erring on the side of being more hawkish. The mantra is that the Fed will remain data dependent. But the concern is that they may move too gradually," said Tom Garretson, fixed income strategist with RBC Wealth Management.

This caution may be warranted.

After all, the US economy is still growing at a decent clip, the unemployment rate is near a half-century low and corporate earnings remain relatively strong. This isn't 2008. There is no imminent economic or market crisis.

"The bottom line is the economy continues to impress with solid corporate profits, along with a healthy US consumer. This cut is being viewed more as an insurance cut, should some of the global slowdown impact the US later this year," said Ryan Detrick, senior market strategist with LPL Financial.

There's also the issue of the US trade tension with China and other nations. While the US and China are currently enjoying a bit of a truce in their tariff war, some argue that the Fed wouldn't have needed to cut rates at all if not for the numerous trade spats between the US and other key partners.

"Weakness outside of the US has intensified," said Brad Neuman director of market strategy with money management firm Alger. "If the US and China reach a trade deal they may not need to cut more -- and they likely wouldn't have cut if not for trade tension."

-- CNN Business' Matt Egan and Paul R. La Monica contributed reporting.