Wall Street Falls Together as Fed Chair Warsh Hints at Hawkish Stance

Wall Street finished lower on the 28th local time as it digested hawkish monetary tightening remarks from Federal Reserve Chair Kevin Warsh.

On this day, the Dow Jones Industrial Average fell 9.45 points, or 0.02%, to close at 53,559.99.

The S&P 500 index fell 19.28 points, or 0.25%, to 7,711.76, while the Nasdaq Composite index dropped 138.93 points, or 0.52%, to close at 26,402.42.

Speculation over a September interest rate hike grew as Fed Chair Warsh expressed strong vigilance against domestic inflation during the Jackson Hole Economic Symposium held in Wyoming.

In his keynote address, Warsh diagnosed, "Looking at price stability, which is one of our mandates, the relevant indicators are in a more concerning situation."

He emphasized, "We must have confidence that underlying inflation is moving toward our target at a clear and sufficient pace. Otherwise, we have work to do."

Despite heightened expectations for a rate hike, analysts suggested that Warsh's remarks reinforced confidence in the Fed's commitment to price stability, which partially supported investor sentiment.

Seema Shah, global chief strategist at Principal Asset Management, explained, "Markets put a premium on policy clarity."

According to the Chicago Mercantile Exchange (CME) FedWatch Tool, the federal funds rate (FFR) futures market priced in a 57.5% probability that the benchmark interest rate would be raised by 0.25 percentage points from the current 3.50–3.75% to 3.75–4.00% at the September FOMC meeting.

This marks a sharp surge of more than 20 percentage points from 35.4% the previous day.

Conversely, the probability of a freeze fell to 42.5%, making the rate hike scenario more dominant than a freeze.

As expectations for a rate hike grew, U.S. Treasury yields rose.

Near the market close, the 2-year yield rose 11.8 basis points from the previous session to 4.348%, marking its largest single-day jump since March.

The 10-year yield rose 5.0 basis points to 4.72%, while the 30-year yield showed limited movement, rising 1.6 basis points to the 5.20% level.

This is interpreted as a result of the market pricing in a high possibility of additional tightening by the Fed while relatively easing long-term inflation concerns.

The dollar also showed strength.

The dollar index, which measures the greenback against six major currencies, rose as high as 99.727 during the session, marking its highest level since the 14th.

Gold prices recorded a decline in the 3% range.

As expectations for rate hikes grew, the investment appeal of non-yielding gold diminished, and the strong dollar placed downward pressure on gold prices as well.

International oil prices also finished lower.

On this day, West Texas Intermediate (WTI) crude for October delivery fell 0.13 dollars, or 0.16%, to settle at 83.40 dollars per barrel on the New York Mercantile Exchange.

On the London ICE Futures Exchange, October Brent crude fell 0.39 dollars, or 0.43%, to end the session at 89.31 dollars per barrel.

(Photo: AP, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.