Fed Chair Kevin Warsh's Hawkish Speech Causes Market Sell-Off
U.S. stocks turned lower on Friday after Federal Reserve Chair Kevin Warsh delivered a hawkish speech at the Jackson Hole symposium, signaling that inflation remains too high and price stability is a priority over rate cuts in 2026. The S&P 500 fell by nearly 0.3%, while the Nasdaq Composite dropped more than 0.4%. Growth stocks were hit hardest as higher interest rates weigh on valuations. Warsh emphasized that if inflation does not fall “clearly and at sufficient speed,” uncomfortable actions—potentially including rate hikes—are likely, shifting market expectations from a potential pause to renewed tightening in September. The two-year Treasury yield rose sharply, reflecting increased odds of a rate hike. Nvidia saw its stock drop 4%, reversing much of Thursday’s post-earnings gains. Despite the broader decline, some stocks like Apple posted modest gains due to price increases for services and products.
Topics: Federal Reserve interest rates Nvidia earnings stock market reaction