Warsh's Hawkish Remarks Send Wall Street Indexes Lower
Wall Street's main indexes closed lower on Friday, as investors turned cautious after Federal Reserve Chair Kevin Warsh reiterated the central bank's focus on fighting inflation. In his first Jackson Hole speech, Warsh stated that without confidence in inflation reaching the Fed's 2% goal, the central bank would have 'more work to do.' This hawkish stance increased prospects for a rate hike.
Traders added bets on a September rate hike after Warsh said he felt recent inflation data did not suggest a change in trend. Mark Hackett, chief market strategist for Nationwide, noted that the market is reacting modestly because Warsh is 'very adamant' about maintaining the 2% inflation target.
Warsh's speech comes at the end of a busy week with corporate earnings and economic data. The S&P 500 lost 19.23 points to 7,711.76, while the Nasdaq Composite fell 138.93 points to 26,402.42. The Dow Jones Industrial Average closed 9.45 points lower to 53,559.99.
Some megacap stocks rose, including Alphabet and Apple, which gained 1.7% and 1.6%, respectively. Salesforce extended gains from the previous session, providing support to the Dow. However, PayPal fell 12.7% after reports that a consortium had decided to abandon their pursuit of the payments firm.