NASDAQ Index Slumps as Warsh's Rate Expectations Shift
The NASDAQ index plummeted 2.3% on Thursday, closing near 19,840, after Federal Reserve Governor Kevin Warsh's speech at the Chicago Council on Global Affairs sparked a significant reassessment of rate-cut expectations.
Warsh argued that inflation risks in the US are underpriced by financial markets and that fiscal policy remains too expansionary to be compatible with the Fed's 2% inflation target. He also stated that services and shelter inflation are structurally stickier than headline figures suggest, and that the Fed's institutional credibility requires it to hold rates higher for longer.
The sell-off was concentrated in high-multiple technology and AI names, which bear the greatest sensitivity to changes in long-duration interest rate expectations. Palantir Technologies fell 3.8% to $74.35, while Advanced Micro Devices shed 2.9%, Nvidia fell 2.7%, and Meta Platforms lost 2.5%. Microsoft declined 2.1%, Amazon retreated 1.9%, and Apple, which carries modest forward multiples for a tech company, fell 1.6%.