Warsh Hints at Rate Hike, Sending Stocks Higher
Investors in the US and Europe got a boost on Friday after Federal Reserve Chairman Kevin Warsh hinted at an interest rate hike. In his address at the Jackson Hole symposium, Warsh signaled that policymakers would have 'work to do' if they weren't confident that underlying inflation was returning to its 2% target.
This sparked renewed bets on Wall Street for a rate rise next month, sending long-dated bond yields further away from multi-decade highs. The Dow Jones Industrial Average rose 162.95 points, or 0.30%, to 53,732.39; the S&P 500 rose 29.12 points, or 0.38%, to 7,760.11; and the Nasdaq Composite rose 111.40 points, or 0.41%, to 26,652.75.
In Europe, stocks gained on Friday, with the Stoxx Europe 600 Index rising 0.5% in the morning, putting it on track to finish August about 1% higher. Auto stocks outperformed, with BMW up 4.5% at €62.64 and motor parts supplier Forvia adding more than 5% to €9.04.