Warsh Signals Possible Rate Hike as Stocks Rise on Inflation Concerns

US stocks are rising as expectations grow for the Federal Reserve to increase interest rates soon to combat high inflation.

The S&P 500 has added 0.4% and is near its all-time high set earlier this month, while the Dow Jones Industrial Average is up 208 points or 0.4%, and the Nasdaq composite is 0.5% higher.

Fed Chairman Kevin Warsh emphasized that short-term interest rates are the primary tool for the Fed to control inflation and maintain a strong job market.

The two-year Treasury yield jumped to 4.32% from 4.22% before Warsh's speech, indicating a higher probability of a rate hike soon. Traders now believe there is a nearly 58% chance of a federal funds rate increase as early as next month, up from the previous 35%.