WASHINGTON — Federal Reserve Chairman Jerome Powell said Tuesday the outlook for the U.S. economy has become cloudier since early May, with rising uncertainties over trade and global growth causing the central bank to reassess its next move on interest rates.

Speaking to the Council on Foreign Relations in New York, Powell said the Fed is now grappling with the question of whether those uncertainties will continue to weigh on the outlook and require action.

Powell did not commit to a rate cut but said the central bank will closely monitor incoming data and be prepared to “act as appropriate to sustain the expansion.”

“The crosscurrents have reemerged, with apparent progress on trade turning to greater uncertainty and with incoming data raising renewed concerns about the strength of the global economy,” Powell said.

Many economists believe the Fed could decide at its next meeting July 30 and 31 to cut its key policy rate, something it has not done since 2008. But markets showed disappointment with Powell’s comments, which suggested a rate cut was not certain.

That followed separate comments Tuesday by James Bullard, head of the Fed’s St. Louis regional bank, who said that he believed a quarter-point cut in July would be sufficient as an insurance move against a possible severe economic slowdown.

The S&P 500 dropped 1% to 2,917, its biggest loss of the month, while the Dow Jones Industrial Average fell 179 points or 0.7%, to 26,548.

In addition to disappointment with the Fed comments, reports showing a drop in consumer confidence and weakness in the housing market added to investor gloom. In an interview with Bloomberg television, Bullard said an “insurance cut” of a quarter-point would be enough to protect against a sharper-than-expected slowdown in economic growth and a half-percentage point cut would be “overdone.” Bullard last week cast the lone dissent from the Fed’s decision to hold rates steady, favoring instead an immediate rate cut.

The baseline outlook for the U.S. economy remains favorable for continued growth, Powell said, but “the risks to this favorable baseline outlook appear to have grown.”

In early May, President Donald Trump more than doubled the tariffs on Chinese goods after U.S.-China trade talks broke down. The president has threatened to essentially hit all Chinese imports with tariffs if China does not meet the administration’s demands for greater protections for U.S. technology. The moves sent financial markets tumbling because of concerns the trade conflict could end the current 10-year economic expansion.