US STOCKS-Wall Street falls on Powell's grim outlook

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* Fed's Powell calls for more fiscal spending
* Bank stocks tumble as Treasury yields slip
* Royal Caribbean falls after $3.3 bln bond offering
* Indexes fall: Dow 1.29%, S&P 0.92%, Nasdaq 0.54%

(Adds quote, details; updates prices)
By Medha Singh and Ambar Warrick
May 13 (Reuters) - Wall Street's main indexes fell on
Wednesday after Federal Reserve Chairman Jerome Powell warned of
an extended period of weak growth and stagnant incomes due to
the coronavirus pandemic.
It will take some time for the U.S. economy to get back to
where it was, Powell said in a webcast, and called for more
fiscal stimulus. "Powell's doing the right thing by warning people that this
is not just going to be a V-shaped recovery," said Sam Hendel,
president and co-portfolio manager of New York-based Levin
Easterly Partners.
"I think the market may be overstating the ease of returning
back to normal."
However, Powell made it clear that the Fed won't push
interest rates below zero, as traders had been increasingly
betting.
The three main U.S. stock indexes have climbed about 30%
from their March lows as investors bet on a pickup in business
activity after various states eased virus-induced lockdowns that
have caused mass layoffs and disrupted supply chains.
However, the rally paused this week on fears of a second
wave of COVID-19 infections following a spike in new cases in
Germany, South Korea and China and a warning from a top U.S.
health expert.
At 11:31 a.m. ET, the Dow Jones Industrial Average .DJI
was down 307.23 points, or 1.29%, at 23,457.55, the S&P 500
.SPX was down 26.48 points, or 0.92%, at 2,843.64. The Nasdaq
Composite .IXIC was down 48.44 points, or 0.54%, at 8,954.12.
Energy .SPNY dropped 2.5%, the steepest percentage losses
among the 11 major S&P sectors. Interest rate-sensitive banks
stocks .SPXBK shed 4%, tracking a slight drop in U.S. Treasury
yields. US/
Wall Street's fear gauge .VIX rose for the second day to
hit a one-week high.
"Volatility is likely to persist because there's a lot of
uncertainty on how this virus plays out," said Brian Levitt,
Global Market Strategist for Invesco.
Royal Caribbean Cruises RCL.N launched a $3.3 billion bond
offering, pledging 28 of its ships as collateral and forecast
heavy losses for the first quarter. Its shares fell 6.8%.
Declining issues outnumbered advancers for a 4.22-to-1 ratio
on the NYSE and for a 3.32-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and 10 new
lows, while the Nasdaq recorded 28 new highs and 71 new lows.