Stocks Decline as Fed Chair Warsh Signals Higher Rate Hike Probability
On Friday, major U.S. stock indices closed lower after Federal Reserve Chair Warsh signaled a stronger commitment to reducing inflation and increased the likelihood of an interest rate hike at next month's FOMC meeting. The probability for a September rate increase rose from 36% to 57%, pushing bond yields higher with the 10-year T-note yield rising by five basis points to 4.72%. Market sectors like chipmakers and AI infrastructure were particularly affected, led by Marvell Technology's stock falling nearly 10% after a disappointing Q3 forecast. The market initially saw gains earlier in the day as revised consumer sentiment data showed improvement, but these were quickly reversed due to hawkish Fed commentary. Additionally, economic indicators such as an unexpected downward revision of U.S. nonfarm payrolls and weaker-than-expected Chicago PMI readings added pressure on stocks. Despite a strong Q2 earnings outlook for the S&P 500—projected at nearly 32% growth—the day ended with broad declines across major indices.
Tickers: $MRVL