Warsh's Hawkish Comments Spark Sell-Off in Stocks

Stocks plummeted on Wednesday after Federal Reserve Chair Kevin Warsh's hawkish press conference following the central bank's rate hike. The S&P 500 dropped by 1% and headed towards its lowest close since July, while the Dow Jones Industrial Average fell by 1.7%, or over 700 points.

The selling started during the press conference, which hinted that the recent quarter-point increase may not be the last. Warsh's comments were seen as a departure from his predecessor Jerome Powell's approach, who described policy as 'modestly restrictive'. In contrast, Warsh said he would be hard-pressed to describe broad financial conditions as restrictive.

This shift in tone was met with skepticism by some investors, who had expected the Fed to signal a pause in rate hikes. Jeffrey Roach, chief economist at LPL Financial, noted that 'the history is clear' that once the Fed begins raising rates, it does so multiple times.