Wednesday’s steep selloff following Federal Reserve Chair Jerome Powell’s tariff warning highlights the challenge investors face navigating a market that’s on a knife’s edge over headlines tied to U.S. trade policy. The Dow Jones Industrial Average slumped about 700 points Wednesday, or 1.7%. The S & P 500 and Nasdaq Composite lost more than 2% and 3%, respectively. The tech-heavy index moved closer to a bear market, closing the day 19.2% off its December all-time high. The severity of the drawdown, made worse Wednesday by Powell telling an audience in Chicago that President Trump’s tariffs could send inflation higher and put the central bank’s dual mandate of full employment and 2% inflation at risk, suggests volatility will continue so long as uncertainty defines markets. On Wednesday, the VIX index , Wall Street’s fear gauge once again topped 30. .SPX 5D mountain S & P 500 over the past five days. “The fact that the S & P 500 took out the -1.5% morning lows near 5,300 and extended session losses to as much as -3.5% towards 5,200 in late-day trade underscores the fact that as forward-looking discount mechanisms, markets inherently hate uncertainty,” Sevens Report’s Tom Essaye wrote about Wednesday’s chaotic trading. Powell’s comments show the challenge the Fed faces in negotiating the current macroeconomic backdrop without making an error, Essaye’s note said. “Without having a better idea of underlying economic trends and clear understanding of how tariffs will impact growth and inflation going forward, Powell and company pretty much have their hands tied, while being stuck between a rock (inflation) and a hard place (growth risks),” Essaye wrote. “Bottom line, Powell effectively communicated risks of a policy mistake by his FOMC are the highest they’ve been since he took the reins at the Fed from [former Fed chair Janet] Yellen in 2018.” Elsewhere, however, other investors are more sanguine toward markets. Fundstrat Global Advisors’ Tom Lee, a long-time bull, said he expects the bottom is in, regardless of Wednesday’s pullback. “Our overall takeaway is that this pullback is disappointing (but not surprising) and markets are in a much better place Wednesday compared to 4/7-4/8 last week when the S & P 500 was probing 4,800,” Lee wrote. “Thus, to us, we are not too bothered by this pullback.” Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange!| Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!