Dow futures slide 350 points as stock rally fades, with oil falling and Fed's Powell on deck to speak

• US stock futures fell Wednesday, with Dow futures down about 350 points as recession worries returned.

• Fed Chairman Jerome Powell will appear before lawmakers to talk monetary policy later in the day.

• Oil prices fell almost 5% on news that President Joe Biden is nearing a decision on a US gas tax holiday.

Dow futures fell about 350 points Wednesday in a pullback for stocks worldwide as investors worried once again about the risk of recession, with oil prices slipping again.

US stock futures dropped early Wednesday as large gains made by the three major US indices in the prior session fizzled out. Futures on the Dow Jones Industrial Average were down 343 points, or 1.12%, recovering somewhat from an earlier 480-point slide. Futures on the S&P 500 and Nasdaq dropped 1.33% and 1.56%, respectively.

Recession fears returned to the market after Wall Street banks such as Deutsche Bank and Morgan Stanley stepped up their warnings about the prospect of a severe and sustained downturn in the US economy, as the Federal Reserve aggressively hikes interest rates to tame inflation at 41-year highs.

"It seems that markets just can't shake off fears of intensive central bank tightening and recession nerves," Oanda senior market analyst Jeffrey Halley said in a note.

After several months of decades-high inflation and record gasoline prices, investors will be watching Fed Chair Jerome Powell's testimony to Congress on Wednesday for signs that the political pressure on the Fed is mounting, Saxo Bank strategists suggested.

Powell's comments will be scrutinized for any hint on whether policymakers intend to ease up or to hike interest rates by 75 basis points again in July.

"The FOMO gnomes of Wall Street will be desperately looking for signs he is blinking on tightening so that they can rush back into their buy-the-dip happy place," Halley said.

The US economy could get some short-term relief from surging fuel prices, which have helped drive inflation higher in recent months. US President Joe Biden is expected to announce a "gas tax holiday"' that will put the 18% a gallon levy on hold for the next three months.

Oil prices fell on that expectation, with Brent crude down 4.40% at $109.64 a barrel and WTI crude sliding 4.95% to $104.12 a barrel.

Elsewhere, global stocks struggled Wednesday, with the MSCI World Index down 0.68%. Europe's pan-continental STOXX 600 slid 1.56%, while Frankfurt's DAX dropped 1.99%, and Paris's CAC 40 lost 1.78% in the early going.

In London, the FTSE 100 slipped 1.46% after official data showed inflation hit 9.1% in May, its highest level since March 1982 and the highest rate in the G7 group of advanced economies. The sign of persistent inflation added to the wider market's concerns about recession.

"With inflation at such high levels, the Bank of England faces a dilemma," JPMorgan Asset Management market strategist Mike Bell said. "We expect them to keep raising rates until there are clear signs that the labor market is weakening."

In Asia, stock markets closed lower after the Chinese city of Shenzhen suffered a fresh coronavirus outbreak. Hong Kong's Hang Seng was down 2.56%, the Shanghai Composite slid 1.20%, and Tokyo's Nikkei 225 edged 0.37% lower.

Here's how other major assets are performing this morning:

• There was minor relief for the bond market, despite warnings that fixed income could be "massacred" by Fed rate hikes. The US 10-year Treasury note yield fell 52 basis points to 3.232%, and US 2-year note yields dropped 62 basis points to 3.149%.

• The Japanese yen briefly fell to a 24-year low of 73.14 cents after Bank of Japan minutes showed policymakers will stick to their ultraloose monetary policy.

• Cryptocurrencies plummeted again after a brief rally, with bitcoin down 4.43% to $20,261 and ethereum 6.63% lower at $1,081.56.

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